21 September, 2008

The market meets a need

Even as the government-regulated markets teeter on the brink, it's good to remember the good that can come from the gray and black markets--simple supply and demand, and entrepreneurship. In Estonia, the government discovered a underwater pipeline that was set up to pump cheap Russian vodka two kilometers under a reservoir into the country, where it could be sold without export tariffs. At least 6,200 liters of it were pumped under the border before it was shut down.

How much is the tariff on imported vodka in Estonia? It must be substantial to justify the investment in a pipeline. And why should anyone assume there's only one?

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