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Tuesday, 8 September 2009

Happy Days are here again

Congratulations to the good people of Edinburgh who have confirmed the Masterley Hypothesis, namely that when an arbitrary constraint is imposed, rational actors whose prior behaviour was rendered infeasible by the constraint will congregate at the constraint.

It seems that the new laws in Scotland regarding happy hours have had an entirely predictable result. The law attempted to restrict binge drinking by banning happy hours. Now I am not an expert in the economics of city centre drinking establishments, but I appreciate that pub owners do not give their drinks away out of charity, and are canny enough not to be driven out of business by a price war and chase to the bottom. I can appreciate that the bars have certain fixed costs and that profit might be maximised by some lower margin high volume business at what would otherwise be slack times. Perhaps bar owners find that a happy hour boosts business and increases later high margin takings. Either way, pubs are basivcally cash businesses and if so many bars had happy hours it must be because they found they had more net cash at the end of the week with happy hours than without.

So it is hardly surprising that after the Scottish parliament enacted legislation that drinks had to be sold at the same price for at least 72 hours, many pubs have done their arithmetic and announced Happy Days, selling beers and ciders at reduced prices for half the week.

So Monday night to Thursday night is the new party night in Scotland. Watch those sick leave figures soar.

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