Tuesday, February 12, 2008


Jack is spending some time in British Columbia. He writes that the provincially operated auto insurance is, far pricier than the private Ontario system, in part because of subsidies to bad drivers who wouldn't be insurable there. This is to be expected. If the risk pool includes people who impose high costs on the system, and if they cannot be charged premia to match those costs (probablistically), then everyone else will have to bear a share of those costs. It is inefficient because the system tends to encourage too many risky drivers to be on the roads; it also, because of the higher insurance premia, tends to discourage some very low risk drivers from driving.Jack continues,Privatized alcohol businesses compete with the Provincial outlets. Prices about 25% higher than Ontario though, flying in the face of the usual predictions. This seems unlikely to me. I know from nothing about the BC retail liquor business, but here are my suspicions:It is extremely unlikely that gubmnt and private retail liquor outlets compete head-to-head. One way the gubmnt stores can survive is if they are subsidized, directly or indirectly. More likely in this instance is that the prices are regulated and kept above the Ontario levels to guarantee the survival of the gubmnt stores. Otherwise the private outlets would compete the snot out of them.


The views expressed on blogs distributed by Newstex and its re-distributors ("Blogs via Newstex") are solely the author's and not necessarily the views of Newstex or its re-distributors. Posts from such authors are provided "AS IS", with no warranties, and confer no rights. The material and information provided in Blogs via Newstex are for general information only and should not, in any respect, be relied on as professional advice. No content on such Blogs via Newstex is "read and approved" before it is posted. Accordingly, neither Newstex nor its re-distributors make any claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained therein or linked to from such blogs, nor take responsibility for any aspect of such blog content. All content on Blogs via Newstex shall be construed as author-based content and commentary. Accordingly, no warranties or other guarantees will be offered as to the quality of the opinions, commentary or anything else offered on such Blogs via Newstex. Reader's comments reflect their individual opinion and their publication within Blogs via Newstex shall not infer or connote an endorsement by Newstex or its re-distributors of such reader's comments or views. Newstex and its re-distributors expressly reserve the right to delete posts and comments at its and their sole discretion.


By EclectEcon