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Regulation and purchase diversity: Empirical evidence from the U.S. alcohol market

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  • Ho, Shuay-Tsyr
  • Rickard, Bradley J.

Abstract

The repeal of the Prohibition Act in 1933 introduced state-level regulations on the retail availability of alcoholic beverages. Recently there has been much debate among industry stakeholders on how changes to these laws will affect consumer choices. We develop an index to measure purchase diversity for alcoholic beverages that considers similarities in product attributes. Following a set of households that moved between regulatory environments during the 2004 to 2016 period, we examine the effect of alcohol availability on purchase diversity. Our key finding shows that consumers further diversify their product selections in states that allow alcohol sales in grocery stores.

Suggested Citation

  • Ho, Shuay-Tsyr & Rickard, Bradley J., 2021. "Regulation and purchase diversity: Empirical evidence from the U.S. alcohol market," International Review of Law and Economics, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:irlaec:v:68:y:2021:i:c:s0144818821000326
    DOI: 10.1016/j.irle.2021.106008
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    More about this item

    Keywords

    Alcoholic beverages; Consumer behavior; Diversification index; Regulation; Retail availability;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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