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State Liquor Licensing, Implicit Contracting, and Dry/Wet Counties

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  • Toma, Eugenia Froedge

Abstract

Local option liquor laws are generally interpreted as granting vote rs the right to choose between allowing and prohibiting alcoholic bevera ge sales. This paper argues that the real choice confronting voters i s between legal sales according to state-prescribed rules and illegal sales according to an informal set of locally-determined rules. Give n this choice, rational voters will choose the option with the lower relative price. State laws restricting the number of licenses that can be issued in legally-wet jurisdictions prove to be more powerful than religious preferences in explaining the pattern of dry counties. Copyright 1988 by Oxford University Press.

Suggested Citation

  • Toma, Eugenia Froedge, 1988. "State Liquor Licensing, Implicit Contracting, and Dry/Wet Counties," Economic Inquiry, Western Economic Association International, vol. 26(3), pages 507-524, July.
  • Handle: RePEc:oup:ecinqu:v:26:y:1988:i:3:p:507-24
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    Cited by:

    1. Koleman S. Strumpf & Felix Oberholzer-Gee, 2002. "Endogenous Policy Decentralization: Testing the Central Tenet of Economic Federalism," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 1-36, February.
    2. Fernandez, Jose & Gohmann, Stephan & Pinkston, Joshua, 2015. "Breaking Bad: Are Meth Labs Justified in Dry Counties?," MPRA Paper 66274, University Library of Munich, Germany.
    3. Nelson, Jon P., 2001. "Advertising Bans, Monopoly, and Alcohol Demand: Testing for Substitution Effects Using Panel Data," Working Papers 1-01-1, Pennsylvania State University, Department of Economics.
    4. 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.

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