Given the constraint of a flat tax on all groups because of problems of available data and high
measurement costs, a lower tax rate than T* = MEC of the excessive consumption group is
required. In principle, the compromise that achieves overall efficiency (and assuming a $ is a $ for
both groups) is a rate that equates the marginal efficiency gain of less alcohol consumption and a
reduction of external costs of the excessive consumption group with the marginal efficiency loss of
too little consumption by the other group.