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State Casket Sales Restrictions: A Pointless Undertaking?

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  • Judith A. Chevalier
  • Fiona M. Scott Morton

Abstract

We utilize a new micro data set of prices of funeral goods and services at individual funeral homes, plus data from the Economic Census, to examine the effects of state regulations that restrict entry into the funeral goods market. In particular, some states have regulations that allow only licensed funeral homes to sell caskets, while others allow unlicensed retailers, such as Costco, to sell them. However, as caskets and funeral services are complements, generally purchased in one-to-one proportions, it is not a priori clear that casket sales restrictions can expand the rent extraction capabilities of licensed funeral homes. Our results suggest that when courts lift funeral goods sales restrictions, the prices of funeral goods fall but the prices of funeral services rise by nearly as much. Overall, our results support the one-monopoly-rent hypothesis; we do not find that, overall, funeral home revenues decline when restrictions on funeral goods sales are lifted. (c) 2008 by The University of Chicago. All rights reserved.

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  • Judith A. Chevalier & Fiona M. Scott Morton, 2008. "State Casket Sales Restrictions: A Pointless Undertaking?," Journal of Law and Economics, University of Chicago Press, vol. 51(1), pages 1-23, February.
    • Handle: RePEc:ucp:jlawec:v:51:y:2008:i:1:p:1-23
    DOI: 10.1086/588595
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    References listed on IDEAS

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    1. Harrington, David E & Krynski, Kathy J, 2002. "The Effect of State Funeral Regulations on Cremations Rates: Testing for Demand Inducement in Funeral Markets," Journal of Law and Economics, University of Chicago Press, vol. 45(1), pages 199-225, April.
    2. Whinston, Michael D, 1990. "Tying, Foreclosure, and Exclusion," American Economic Review, American Economic Association, vol. 80(4), pages 837-859, September.
    3. Blackstone, Erwin A, 1975. "Restrictive Practices in the Marketing of Electrofax Copying Machines and Supplies: The SC M Corporation Case," Journal of Industrial Economics, Wiley Blackwell, vol. 23(3), pages 189-202, March.
    4. Barry Nalebuff, 2004. "Bundling as an Entry Barrier," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 159-187.
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    Cited by:

    1. Bruno Deffains & Dominique Demougin, 2023. "Capitation taxes and the regulation of professional services," European Journal of Law and Economics, Springer, vol. 55(2), pages 167-193, April.
    2. Thierry Blayac & Patrice Bougette & Christian Montet, 2014. "How consumer information curtails market power in the funeral industry," European Journal of Law and Economics, Springer, vol. 37(3), pages 421-437, June.
    3. Daniel J. Smith & Noah J. Trudeau, 2019. "The Undertaker’s Cut: Challenging the Rational Basis for Casket Licensure," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 34(Summer 20), pages 23-41.
    4. Harrington, David, 2018. "Constraining Rivals: The Effect of State-Mandated Facility Requirements on the Locations and Sizes of Funeral Homes," Working Papers 06958, George Mason University, Mercatus Center.
    5. Chiara Farronato & Andrey Fradkin & Bradley Larsen & Erik Brynjolfsson, 2020. "Consumer Protection in an Online World: An Analysis of Occupational Licensing," NBER Working Papers 26601, National Bureau of Economic Research, Inc.
    6. Jerry Ellig, 2015. "State funeral regulations: inside the black box," Journal of Regulatory Economics, Springer, vol. 48(1), pages 97-123, August.
    7. David E. Harrington & Jaret Treber, 2020. "Constraining Competition With State Mandated Facility Requirements," Contemporary Economic Policy, Western Economic Association International, vol. 38(4), pages 659-674, October.
    8. Conor Norris & Edward J. Timmons, 2020. "Restoring vision to consumers and competition to the marketplace: analyzing the effects of required prescription release," Journal of Regulatory Economics, Springer, vol. 57(1), pages 1-19, February.
    9. Ramon Corona, 2014. "A Comparative Analysis Of Major Us Retailers Based On Enterprise Marketing Efficiency," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 8(4), pages 25-39.
    10. Ramon Corona & Nelson Altamirano, 2010. "Is The Treasure Hunt Strategy Working For Costco?," International Journal of Management and Marketing Research, The Institute for Business and Finance Research, vol. 3(3), pages 83-93.
    11. David E. Harrington, 2007. "Markets: Preserving Funeral Markets with Ready-to-Embalm Laws," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 201-216, Fall.

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