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Pennsylvania’s Failed Experiment in Flexible Pricing | FreedomWorks

As with 16 states — including like Alabama, Ohio, and Virginia — at the end of Prohibition, Pennsylvania chose to establish a system of total state control over alcohol, banning private alcohol sales and creating a state monopoly.

Established in 1933 to comply with the 21st Amendment, the Pennsylvania Liquor Control Board (PLCB) elected to institute a fixed pricing index setting a uniform standard pricing tool for all alcohol in the state. The fixed pricing system worked perfectly well for over 80 years, providing adequate funding for alcohol education and other programs. Yet, as with all bureaucracy, the PLCB got greedy, seeking total control over pricing under the false pretense of helping consumers.

In late 2016, the PLCB managed to get legislation passed the legislature that allowed this state regulatory agency to institute “flexible pricing” on alcohol sales in the state. Prior to the General Assembly passing Act 39, the PLCB was required to set alcohol prices based on a uniform 30 percent mark-up on all items. After years of unduly criticizing private alcohol manufacturers for justifiably caring about profit margins, the PLCB managed to sneak ‘flexible pricing’ into the omnibus amendments to the Liquor Code passed in 2016.

Instead of prices being set by a uniform standard, the PLCB was granted the authority to set ‘flexible prices’ based on the state’s faulty assessment of market rates. This change meant that the state commission whose sole purpose is to regulate the alcohol business and prevent alcohol abuse in Pennsylvania suddenly turned themselves into an alcohol business. After denouncing the alcohol industry’s focus on profit for decades, the PLCB quickly went into profit-maximization mode, hiking prices which nearly doubled revenue over the last few years.

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Pennsylvania’s Failed Experiment in Flexible Pricing | FreedomWorks.

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