Advertising Bans, Monopoly, and Alcohol Demand: Testing for Substitution Effects Using Panel Data
Using a panel of 45 states for the period 1982-97, this study analyzes the importance of several restrictive alcohol regulations, including advertising bans for billboards, bans of price advertising, state monopoly control of retail stores, and changes in the minimum legal drinking age. In contrast to previous research, the study allows for substitution among beverages as a response to a regulation that targets a specific beverage. A restrictive law that applies only to one beverage (or one form of advertising) can result in substitution toward other beverages (and other media). Allowing for substitution means that the net effect on total alcohol consumption is uncertain, and must be determined empirically. The empirical results demonstrate that monopoly control of spirits reduces consumption of that beverage, and increases consumption of wine. The effect on beer is positive, but is not statistically significant. The net effect on total alcohol is significantly negative. Higher minimum legal drinking age laws have negative effects on beverage and total alcohol consumption. Partial bans of advertising do not reduce total alcohol consumption, which in part reflects substitution effects. Results in the paper are applied to the Supreme Court's Central Hudson test for First Amendment constitutionality of restrictions on commercial speech.
|Date of creation:||Jun 2001|
|Date of revision:|
|Contact details of provider:|| Postal: 608 Kern Graduate Building, University Park, PA 16802-3306|
Web page: http://econ.la.psu.edu/info/working_papers.html
More information through EDIRC
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.:
- Jeffrey Milyo & Joel Waldfogel, 1998.
"The Effect of Price Advertising and Prices: Evidence in the Wake of 44 Liquormart,"
NBER Working Papers
6488, National Bureau of Economic Research, Inc.
- Joel Waldfogel & Jeffrey Milyo, 1999. "The Effect of Price Advertising on Prices: Evidence in the Wake of 44 Liquormart," American Economic Review, American Economic Association, vol. 89(5), pages 1081-1096, December.
- Jeffrey Milyo & Joel Waldfogel, 1998. "The Effect of Price Advertising on Prices: Evidence in the Wake of 44 Liquormart," Discussion Papers Series, Department of Economics, Tufts University 9807, Department of Economics, Tufts University.
- Jonathan Gruber, 2000.
"Risky Behavior Among Youths: An Economic Analysis,"
NBER Working Papers
7781, National Bureau of Economic Research, Inc.
- Cook, Philip J. & Moore, Michael J., 2000.
Handbook of Health Economics,
in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 30, pages 1629-1673
- Michael J. Moore & Philip J. Cook, 1999. "Alcohol," University of Chicago - George G. Stigler Center for Study of Economy and State 156, Chicago - Center for Study of Economy and State.
- Philip J. Cook & Michael J. Moore, 1999. "Alcohol," NBER Working Papers 6905, National Bureau of Economic Research, Inc.
- McGahan, A M, 1995. "Cooperation in Prices and Capacities: Trade Associations in Brewing after Repeal," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 521-59, October.
- Toma, Eugenia Froedge, 1988. "State Liquor Licensing, Implicit Contracting, and Dry/Wet Counties," Economic Inquiry, Western Economic Association International, vol. 26(3), pages 507-24, July.
- Smith, Janet Kiholm, 1982. "An Analysis of State Regulations Governing Liquor Store Licensees," Journal of Law and Economics, University of Chicago Press, vol. 25(2), pages 301-19, October.
- Ruhm, Christopher J., 1995.
"Economic conditions and alcohol problems,"
Journal of Health Economics,
Elsevier, vol. 14(5), pages 583-603, December.
- Sass, Tim R & Saurman, David S, 1995. "Advertising Restrictions and Concentration: The Case of Malt Beverages," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 66-81, February.
- Saffer, Henry & Chaloupka, Frank, 2000. "The effect of tobacco advertising bans on tobacco consumption," Journal of Health Economics, Elsevier, vol. 19(6), pages 1117-1137, November.
When requesting a correction, please mention this item's handle: RePEc:ecl:peneco:1-01-1. 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: ()
If references are entirely missing, you can add them using this form.