The long-term objective of the research is to construct an economic theory of alcohol control. The specific aims are to connect the theoretical results tightly to the formulation of empirical issues and to design a framework for a comprehensive policy toward alcoholism. The research thus intends to provide a major alternative to the Ledermann and the integration models of alcohol control. The economic theory of alcohol control the three desirable traits; 1) it rests on a rigorous behavioral foundation of individual response to rewards and punishments, 2) it takes into account supply and demand interactions, and 3) it provides a system (or general equilibrium) orientation of policies. The foundation of the economic theory of alcohol control is a model of optimal drinking is defined in terms of alcohol consumed and the way it is consumed. Then four important applications follow. These applications are important because of their relevance to current policy issues. They also illustrate the kind of contributions that theoretical economic analyses can make to the understanding of the alcohol problem. Some of the behavioral issues addressed in the applications are: the demand for alcohol consumption, group drinking, cognitive bias in alcohol use, risk taking, self-control, household inventory of alcohol, binging, bandwagon effect on drinking, advertising alcoholic beverages, substitution among alcoholic beverages. Some of the policy issues addressed are: alcohol taxes, legal sanctions against drunk driving, restrictions on the market availability of alcohol, ban on alcoholic beverage advertising, the interdependence of alcohol policies, health-oriented treatment programs, and disease-oriented treatment programs.