Cafeinated Drinks – Negative Externalities. But what about coffee?

Red Bull, V, Monster, Rockstar are just some of the drinks on offer to the general public, but are these drinks safe? America’s Food and Drug Administration (FDA) is investigating caffeinated products especially drinks. Revenue for these energy drinks is substantial:

USA – $8.6bn
Europe – $5bn

Leading brands in the US as a %
Red Bull – 36%
Monster – 29%
Rockstar – 8%

Monster and Rockstar have cans with 160mg of caffeine – a can of Coke has 35mg. The FDA recommend that no more than 400mg of caffeine should be consumed. With threat of stronger regulation Monster’s net income fell by 17% in the first quarter this year. However a large coffee from Starbucks has twice as much caffeine as a can of Monster but Starbucks seem to get off scot-free. The above is a good example of negative externalities of consumption.

Neg Ext Cons

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