摘要:This article provides empirical evidence that the demand for ethyl alcohol in Lithuania is price elasticand the root cause of this elasticity is the competition between Lithuanian and Polish sellers. The basis for theemergence of competition lies in the price differences between the countries, which arise as a direct consequenceof the Lithuanian government’s policy in the alcohol sector, which is directed towards reckless increases inexcise duties. The increase in Lithuanian excise duties leads to a wider price gap between countries and inthe first months after the increase results increases in prices. In subsequent months, Lithuanian importers andmanufacturers tend to revise the assortment and costs, replacing more expensive goods with cheaper ones orslightly alter the markups. These changes are the main reason why demand in the domestic market graduallyrecovers. The price elasticity of demand predetermines the gradual recovery of the ethyl alcohol market, buteach increase in excise duty reduces the manufacturers’ markups and (or) leads to the changes in product range,where higher-costs products are displaced by lower-cost products.
关键词:alcohol market; public sector economics; non;linear econometric models