Price determination in a competitive market

Extract A: In 2018 the UK introduced the Soft Drinks Industry Levy, a tax paid by manufacturers on drinks with more than 5 g of sugar per 100 ml (18p per litre) and a higher rate above 8 g (24p per litre). Sales of drinks liable for the levy fell from 2.20 billion litres in 2015 to 1.54 billion litres in 2019, while sales of low- and no-sugar drinks rose by over 30%. Extract B: Many manufacturers cut the sugar content of their drinks before the levy started so they would not have to pay it. Critics argue that the levy is regressive and that people simply buy sugar from other foods instead. Supporters point to falling sugar intake among children and say that the revenue (about £300 million a year) funds school sport. Extract C: Obesity costs the NHS an estimated £6.5 billion a year. Economists argue that consumers underestimate the long-term health costs of sugary drinks, that advertising targets children and that information failure is widespread. Alternatives to taxation include advertising bans, minimum unit pricing, regulation of sugar content and education campaigns.