That competition would drive the price down isn’t guaranteed: after privatization in Alberta, according to the Fraser Institute:
Sorry, but I have trouble believing a monopoly situation results in **lower **prices that we would see given true competition, even considering their massive buying power. It’s more likely the savings are not passed on to the consumer, but go towards the LCBO’s profit. (Which is substantial; over a billion dollars a year.)
Interesting.
It’s been a while since i lived in Vancouver, but IIRC the Fraser Institute is a big cheerleader for free markets. If they have trouble finding any price benefits from privatization, that’s a pretty good indication that there may not be any benefit.
They do go on to make excuses, claiming that price increases may be offset by reduced transportation costs for some customers because of the increased number of stores.
Believe what you will, but the fact remains that the prices of most liquor products in Alberta went up. I’m not surprised; claims of how free-market capitalism is supposed to work for the benefit of all to create a consumer’s paradise have always struck me as grossly oversimplified.
As I mentioned earlier, I was living in Calgary right during the transition from public to private liquor sales, and my observation in general is that prices went up and selection went down. Setting aside governmental inefficiencies, a provincewide purchasing organization is going to have a lot more leverage than “Fred n’ Ethel’s Bottles n’ Bait”.
This may have changed in the years since as the market adjusted, smaller players got knocked out etc. Dunno, maybe Featherlou can comment?
I really challenge the idea that LCBO prices are competitive in any form, regardless of the “volume discounts”. Volume discounts are not passed on to the consumers, these only serve to increase the bottom line of the LCBO operations.
To administer the stores operations, they charge a percentage of sales, grossly miniscule compared to the revenue they generate. The LCBO states they provide a “dividend” to the Ontario Government and do not cost anything to run. Hmm lets see, eliminate Sin Taxes of anywhere between 30 to 200% and more on each and every product you sell, then tell me how efficient you are.
Its highway robbery here in Ontario. As a comparision, buy a bottle of well recognzied Rum (Captain Morgans Spiced) here in Ontario , a 26 oz’r costs $28.00 Canadian, compare to the same product across the border in the US - same product same size, cost - how about $9 US. Even when you take the difference in Exchange rate (today = 1.2337) $9 US = $11.10 Canadian!!!
But it’s not just a monopoly; it’s also a monopsony. It’s not the same as having just one cable provider or one waste disposal firm; in this case the LCBO is in a unique position of power with respect to dictating terms from suppliers. Kind of like Wal-Mart, except even more so.
I’m opposed to LCBO monopoly on principle, but it is hard to argue that other jurisdictions get better choice, better service or better prices. The reality of many other jurisdictions with wide-open liquor sales is quite the opposite; a limited choice of shit brands being sold out the back of a variety store.
Which is where quality stores usually come in.
These taxes would exist whether the LCBO had a monopoly or not (hello, the rest of Canada). It’s odd that some many people will recognize the power that a retailer like Wal-Mart has but seem to dismiss it when it comes to the government.
Again, it’s apples and oranges. Think about cigarettes, which cost a lot more in Canada than in the States. There’s no monopoly seller there.
The Tooth is also in Calgary.
From what we’ve experienced in Alberta with privatization of essential services (like car insurance and electricity), it seems to me like there has been no benefit to consumers. I don’t have the inclination to research that; anybody else feeling strong with google-fu, feel free.
I don’t see smaller players getting knocked out of the liquor market. I live across the street from a liquor store, it’s about as small a player as I can imagine.
A thought: did Klein increase liquor taxes at the time of privatization to account for the reduced revenue to the province?
That is odd seeing as one the Province gets out of the booze business you’d think they’d already be making more money as they no longer have to worry about the overhead costs and just sit back and collect the taxes on all liquor sales.
Regarding the LCBO
I’ll have to find a cite but I have heard on some of the harder to find boozes and better quality wines are actually cheaper due the volume sales it does.
I know the taxation scheme changed to a flat tax, but I don’t know the results of doing so.