Model of the Mechanism of Institutional Regulation of Addictive Goods Markets

Abstract:

Addictive goods markets — markets of alcohol-containing products, tobacco, e-cigarettes, energy drinks and other addictive products — are traditionally patronized by the state due to the “failures” of the market mechanism when eliminating externalities; the asymmetry of sellers and buyers information; the lack of consumers’ will; the social determination to regulate supply and demand; an increasing status for the budget and political tools; corruption and shadow institutionalization. The aim of this article is to present the mechanism of their institutional regulation in the system of state regulation of the addictive goods markets. To achieve this, theoretical aspects of the institutional regulation of these markets, the process model of its mechanism, the method of rating effects from circulation of addictive products have been investigated. Meanwhile, a necessity for the synthesis of neoclassical and institutional methods occurred. Applied methods comprise the system method, methods of analysis, comparison, synthesis, logical and mathematical analysis, and modelling. The mechanism of the institutional regulation of addictive goods markets is a device for the transformational impact of the institute, which has been traditionally intact or has been legitimately established by the society, on the diversity of active specific relationships of the subjects of circulation. Structurally and functionally, it includes blocks for a subject’s goal selection (target generator), implementation of solutions to achieve that goal (transformer), monitoring and evaluation of a new system state, the results of the conversion process (monitor), identification of corrective measures given the deviations from target values in the state of a system (corrector). Methodology for assessing the achievement of the goals of institutional regulation of these markets has been developed based on a moderate neoinstitutional method of calculating the integral effect of markets dynamics, balancing the absolute values of positive and negative individual and external effects, and expanded by subjective and structural breakdown of the components in accordance with the society-state-group-individual level system and the evolutionary-genetic theory of production factors. The presented model of effects evaluation opens up an important direction of further empirical investigations of the effects of addictive goods markets dynamics.

full text  PDF