Khao Yai Winery: An Economic Perspective
(5 pages of text)
In 2015, the marketing and business developer at Khao Yai Winery in Thailand wondered whether a new excise tax, which the government implemented in 2012, had led to a decrease in sales despite an overall increase in wine consumption in Thailand. Before deciding whether he should lobby the government to lower the excise tax, he tasked three interns to examine how the government’s taxes on imported and domestic wines affected the winery. The interns also needed to determine how the government policies would be affected by various elasticities—income elasticities, own-price elasticities, and cross-price elasticities.
This case is intended for undergraduate courses in microeconomics, macroeconomics, and international trade, or for a graduate course in managerial economics that deals with elasticity, externalities, effective rates of protection (trade barriers), and/or oligopoly market structures. The analysis includes sub-questions to aid the instructor in guiding an in-depth analysis. The appendix includes pre-case lecture notes to ensure the instructor covers the various topics before assigning the case. After completion of the case, students will be able to
- relate public policy and externalities to Thailand’s wine industry;
- apply elasticity to market analysis; and
- explain how government policy can be used to support domestic wineries.
Agriculture, Forestry, Fishing and Hunting
Thailand, Small, 2015
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