ALCOHOLIC BEVERAGES IN CANADA

In this paper, we investigate the economic determinants of the demand for three alcoholic beverages (wine, spirits, and beer) using a balanced panel for 10 Canadian provinces spanning the years 1980-2003. To this end, several different types of fixed effects models were used. All the models employed indicate that the demand for wine is price inelastic, which is consistent with the results of many earlier studies. The demand for spirits, on the other hand, is price elastic, which is also consistent with the results of earlier studies. Our results also show that both wine and spirits are normal goods and that the price and income elasticities of demand for beer are sensitive to the assumption of homogeneity across the provinces and over time. The policy implications of these results are discussed