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The effect of post-and-hold laws on alcohol consumption

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  • Saffer, Henry
  • Gehrsitz, Markus

Abstract

This paper estimates the effects of post-and-hold laws on alcohol consumption. Post-and-hold laws require alcohol wholesalers to provide a list of prices to the state, which can be reviewed by retailers, competitors and the public. These laws were generally enacted at the end of prohibition with the intention of limiting alcohol consumption by raising prices. The laws may also have the unintended consequence of protecting small retailers. Recently, several large retailers have argued in court that these laws are counter to the Sherman Act, which limits anti-competitive behavior. This paper follows the recent paper by Cooper and Wright (2012) and adds new data and new empirical specifications. The estimation results provide no persuasive evidence of an effect of post-and-hold laws on the consumption of either total ethanol, wine, or spirits. There is evidence of a small effect of beer post-and-hold laws on beer consumption. One possible explanation of this generally null effect is that the wholesale markets for alcohol are so highly regulated that post-and-hold laws have no marginal effect. The empirical results presented in this paper do support alcohol excise taxes as effective means of reducing alcohol consumption.

Suggested Citation

  • Saffer, Henry & Gehrsitz, Markus, 2016. "The effect of post-and-hold laws on alcohol consumption," International Review of Law and Economics, Elsevier, vol. 45(C), pages 63-71.
    • Handle: RePEc:eee:irlaec:v:45:y:2016:i:c:p:63-71
    DOI: 10.1016/j.irle.2015.11.001
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    Cited by:

    1. Byrne, Paul & Nizovtsev, Dmitri, 2017. "Exploring the effects of state differences in alcohol retail restrictions," International Review of Law and Economics, Elsevier, vol. 50(C), pages 15-24.

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    More about this item

    Keywords

    Alcohol; Regulation; Post-and-Hold; Alcohol Price;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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