LCBO privatization. Not cut and dry.

I found this report on the privatization of Alberta’s Liquor Control Board by The Fraser Institute. Surprisingly, the report found that after privatization the average price of liquor actually went up (after considering inflation and price indices). Starting on page 47, the report discusses in detail the implication privatization has had on the price of alcohol.

[Results on changes in retail liquor prices since privatization suggest that in spite of any
lower private retailer operating costs that could have been achieved by reducing labour
costs, for example, and in spite of more intense spatial competition among liquor retailers and evidence of falling wholesale liquor prices (on average), average nominal retail
liquor prices have increased since privatization.] p.51-52

However, consumers now have more choice and convenience when purchasing alcohol.

[A sample of private liquor stores from across Alberta has an average product selection that exceeds the weighted average product selection of ALCB stores. Product selection carried in the ALCB warehouse has more than doubled under privatization…As well…the number of private liquor stores is approximately triple the number of
ALCB stores.] p.68

The report is full of interesting information on the impacts of privatization including the effects on government revenue, distribution efficiency, and workers jobs and wages. The issue is complex with many unexpected implications. Despite the propaganda, the benefits and drawbacks of privatization depend largely on where your sitting, with consumers not necessarily coming out on top. This is a must read for those interested in the privatization of the LCBO.