Alcohol, antitrust, and the 21st Amendment: An empirical examination of post and hold laws
The 21st Amendment repealed prohibition, but granted the states broad power to regulate the distribution and sale of alcohol to consumers within their borders. Pursuant to this authority, states have established a complex web of regulations that limit the ability of beer, wine, and liquor producers to control the distribution of their product. From a consumer welfare perspective, one of the most potentially harmful state alcohol distribution regulations are “post and hold” laws (“PH laws”). PH laws require that alcohol distributors share future prices with rivals by “posting” them in advance, and then “hold” these prices for a specified period of time. Economic theory would suggest that PH laws reduce unilateral incentives for distributors to reduce prices and may facilitate tacit or explicit collusion, both to the detriment of consumers. Consistent with economic theory, we show that the PH laws reduce consumption by 2–8%. We also test whether, by reducing consumption, PH laws provide offsetting societal benefits in the form of reducing drunk driving accidents and underage drinking. We find no measurable relationship between PH laws and these social harms. These results suggest a socially beneficial role for antitrust challenges to PH laws and similar anticompetitive state regulation. If states wish to reduce the social ills associated with drinking, our results also suggest that directly targeting social harms with zero tolerance laws and lower drunk driving thresholds are superior policy instruments to PH laws.
Volume (Year): 32 (2012)
Issue (Month): 4 ()
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/irle|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Maura P. Doyle & Christopher M. Snyder, 1999.
"Information Sharing and Competition in the Motor Vehicle Industry,"
Journal of Political Economy,
University of Chicago Press, vol. 107(6), pages 1326-1364, December.
- Maura P. Doyle & Christopher M. Snyder, 1997. "Information sharing and competition in the motor vehicle industry," Finance and Economics Discussion Series 1997-4, Board of Governors of the Federal Reserve System (U.S.).
- Gallet, Craig A., 2007.
"The demand for alcohol: a meta-analysis of elasticities,"
Australian Journal of Agricultural and Resource Economics,
Australian Agricultural and Resource Economics Society, vol. 51(2), June.
- Craig A. Gallet, 2007. "The demand for alcohol: a meta-analysis of elasticities," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), pages 121-135, 06.
- Slade, Margaret E, 1998. "Beer and the Tie: Did Divestiture of Brewer-Owned Public Houses Lead to Higher Beer Prices?," Economic Journal, Royal Economic Society, vol. 108(448), pages 565-602, May.
- Sass, Tim R & Saurman, David S, 1993. "Mandated Exclusive Territories and Economic Efficiency: An Empirical Analysis of the Malt-Beverage Industry," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 153-77, April.
- Coate, Douglas & Grossman, Michael, 1988.
"Effects of Alcoholic Beverage Prices and Legal Drinking Ages on Youth Alcohol Use,"
Journal of Law and Economics,
University of Chicago Press, vol. 31(1), pages 145-71, April.
- Douglas Coate & Michael Grossman, 1986. "Effects of Alcoholic Beverage Prices and Legal Drinking Ages on Youth Alcohol Use," NBER Working Papers 1852, National Bureau of Economic Research, Inc.
- Albaek, Svend & Mollgaard, Peter & Overgaard, Per B, 1997.
"Government-Assisted Oligopoly Coordination? A Concrete Case,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 45(4), pages 429-43, December.
- Svend Albæk & Peter Møllgaard & Per Baltzer Overgaard, 1997. "Government-Assisted Oligopoly Coordination? A Concrete Case," CIE Discussion Papers 1997-03, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- Green, Edward J. & Porter, Robert H., 1982.
"Noncooperative Collusion Under Imperfect Price Information,"
367, California Institute of Technology, Division of the Humanities and Social Sciences.
- Green, Edward J & Porter, Robert H, 1984. "Noncooperative Collusion under Imperfect Price Information," Econometrica, Econometric Society, vol. 52(1), pages 87-100, January.
- Edward J Green & Robert H Porter, 1997. "Noncooperative Collusion Under Imperfect Price Information," Levine's Working Paper Archive 1147, David K. Levine.
- Sara Markowitz, 1999.
"The Price of Alcohol, Wife Abuse, and Husband Abuse,"
NBER Working Papers
6916, National Bureau of Economic Research, Inc.
- Sara Markowitz, 2000. "The Price of Alcohol, Wife Abuse, and Husband Abuse," Southern Economic Journal, Southern Economic Association, vol. 67(2), pages 279-303, July.
- Sass, T. & Saurman, D.S., 1993.
"Efficiency Effects of Exclusive Territories: Evidence from the Indiana Beer Market,"
1993_09_03, Department of Economics, Florida State University.
- Sass, Tim R & Saurman, David S, 1996. "Efficiency Effects of Exclusive Territories: Evidence from the Indiana Beer Market," Economic Inquiry, Western Economic Association International, vol. 34(3), pages 597-615, July.
- Markowitz, Sara, 2005. "Alcohol, Drugs and Violent Crime," International Review of Law and Economics, Elsevier, vol. 25(1), pages 20-44, March.
- Chesson, Harrell & Harrison, Paul & Kassler, William J, 2000. "Sex Under the Influence: The Effect of Alcohol Policy on Sexually Transmitted Disease Rates in the United States," Journal of Law and Economics, University of Chicago Press, vol. 43(1), pages 215-38, April.
- Ornstein, Stanley I & Hanssens, Dominique M, 1985. " Alcohol Control Laws and the Consumption of Distilled Spirits and Beer," Journal of Consumer Research, Oxford University Press, vol. 12(2), pages 200-213, September.
- Chatterji, Pinka & Dave, Daval & Kaestner, Robert & Markowitz, Sara, 2004. "Alcohol abuse and suicide attempts among youth," Economics & Human Biology, Elsevier, vol. 2(2), pages 159-180, June.
- Kenkel, Donald S, 1993. "Drinking, Driving, and Deterrence: The Effectiveness and Social Costs of Alternative Policies," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 877-913, October.
- Henry Saffer & Michael Grossman, 1986. "Beer Taxes, the Legal Drinking Age, and Youth Motor Vehicle Fatalities," NBER Working Papers 1914, National Bureau of Economic Research, Inc.
- Christopher S. Carpenter, 2005. "Heavy Alcohol Use and the Commission of Nuisance Crime: Evidence from Underage Drunk Driving Laws," American Economic Review, American Economic Association, vol. 95(2), pages 267-272, May.
- Xavier Vives, 2002. "Private Information, Strategic Behavior, and Efficiency in Cournot Markets," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 361-376, Autumn.
- Jon Nelson, 2003. "Advertising Bans, Monopoly, and Alcohol Demand: Testing for Substitution Effects using State Panel Data," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(1), pages 1-25, February.
- Steven D. Levitt & Jack Porter, 2001. "How Dangerous Are Drinking Drivers?," Journal of Political Economy, University of Chicago Press, vol. 109(6), pages 1198-1237, December.
- Christopher Carpenter, 2004. "Heavy alcohol use and youth suicide: Evidence from tougher drunk driving laws," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 23(4), pages 831-842.
- Fuller, Stephen W. & Ruppel, Fred J. & Bessler, David A., 1990. "Effect Of Contract Disclosure On Price: Railroad Grain Contracting In The Plains," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 15(02), December.
- Christensen, Laurits Rolf & Caves, Richard E, 1997. "Cheap Talk and Investment Rivalry in the Pulp and Paper Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 45(1), pages 47-73, March.
- W. Kip Viscusi & Joseph E. Harrington & John M. Vernon, 2005. "Economics of Regulation and Antitrust, 4th Edition," MIT Press Books, The MIT Press, edition 4, volume 1, number 026222075x, March.
- Saroja Selvanathan & Eliyathamby Selvanathan, 2007. "Another look at the identical tastes hypothesis on the analysis of cross-country alcohol data," Empirical Economics, Springer, vol. 32(1), pages 185-215, April.
- Daniel Eisenberg, 2003. "Evaluating the effectiveness of policies related to drunk driving," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 22(2), pages 249-274.
- Sass, Tim R., 2005. "The competitive effects of exclusive dealing: Evidence from the U.S. beer industry," International Journal of Industrial Organization, Elsevier, vol. 23(3-4), pages 203-225, April.
- Carpenter Christopher S & Kloska Deborah D & O'Malley Patrick & Johnston Lloyd, 2007. "Alcohol Control Policies and Youth Alcohol Consumption: Evidence from 28 Years of Monitoring the Future," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-23, May.
- Thomas S Dee, 2001. "Does setting limits save lives? The case of 0.08 BAC laws," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(1), pages 111-128.
- Sara Markowitz & Michael Grossman, 1998. "Alcohol Regulation And Domestic Violence Towards Children," Contemporary Economic Policy, Western Economic Association International, vol. 16(3), pages 309-320, 07.
When requesting a correction, please mention this item's handle: RePEc:eee:irlaec:v:32:y:2012:i:4:p:379-392. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If references are entirely missing, you can add them using this form.