Public policies can affect alcoholic beverage prices in several ways. One way is excise taxes on alcoholic beverages. An excise tax is based on the quantity of alcoholic beverage purchased, in contrast to a sales tax, which is based on the price of a purchased good. The extent to which increases in excise taxes are passed along to consumers rather than absorbed by firms also determines the price of goods. Because little research has been conducted in this area, it is unclear how excise taxes influence prices for alcoholic beverages.
