State Population Restrictions on Retail Alcoholic Beverage Licenses [updated Dec. 2006]
Many states of the U.S. use population formulas to limit the number of on premise or off premise retail alcoholic beverage consumption outlets. The purposes of these restrictions are to reduce the negative externalities from alcoholic beverage consumption and to limit the spillovers associated with the outlets themselves, such as noise, loitering, crime, and proximity to school children. State population restrictions on outlets may be superior to alcoholic beverage control systems that rely on state excise taxation to reduce negative consumption externalities and on local governments to control outlet externalities if the politics of local zoning override outlet spillover considerations. However, a disadvantage of state mandated population formulas is that they cannot take account of differences in alcoholic beverage demand that are independent of resident populations. Furthermore, the literature is not conclusive with respect to the effects of outlet limitations on consumption. In this paper we investigate the effects of the number of retail alcoholic beverage outlets on beer, wine, and spirits consumption in the U.S. We depart from previous approaches by separating outlets into their on and off premise components. We also examine, for the case of New Jersey, the variation in the market value of alcoholic beverage retail licenses that results from the mismatch of outlets from state population formulas with local area alcoholic beverage demand. We do so by analyzing data from municipal auctions of new retail licenses and by analyzing the relationship between restaurant meal and drink prices and alcoholic beverage licenses. We find small or statistically insignificant off premise outlet effects on alcoholic beverage demand, statistically significant employment and income effects on the market value of licenses, and quality constant higher prices in licensed New Jersey restaurants that reflect the opportunity costs of license ownership.
|Date of creation:||Sep 2005|
|Date of revision:|
|Contact details of provider:|| Postal: 360 Dr. Martin Luther King, Jr. Blvd., Newark, NJ 07102|
Phone: (973) 353-5259
Web page: http://www.ncas.rutgers.edu/economics
More information through EDIRC
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.:
- 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.
When requesting a correction, please mention this item's handle: RePEc:run:wpaper:2005-006. 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: (Vlad Manole)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.