HK is slated to introduce its plastic bag charge at retail outlets starting tomorrow. Here is the story.
What interests me is whether, with a fixed charge of 50 cents per bag, and say if you are contemplating to buy just one item(suppose you need a bag for this, otherwise the constriant is not binding anyway), a customer would pick a relatively more expensive item than he or she would without the plastic bag charge. The reason for this is that the relative price of the more expensive item should fall with the introduction of the plastic bag charge.
I do not invent this line of analysis of course, this is only one application of the Alchain-Allen Theorem.