Thursday, February 5, 2015

Learning economics through pictures - wine prices in Pennsylvania and Arizona

Here's the price tag in Arizona for a 1.5 liter bottle of Gallo Pinot Grigio.  The regular price is $9.99, but it is on sale for $6.99.  

Here is the price tag for the same bottle in Pennsylvania:

That's not all - in Arizona, when you buy six bottles at a time you get a 10% discount!

So without a sale, in Pennsylvania the price is $11.49 and in Arizona the price is $9.99.  With a sale and bulk discounts, it's actually a bigger disparity.  Why such a difference?  Wine is sold through free-markets in Arizona.  But in Pennsylvania the wine stores have a monopoly.  What's even worse is that it is a government-run monopoly, so there is not even a push for efficiency.  A simple step would be for the Pennsylvania government to privatize the liquor industry.

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