State Casket Sales and Restrictions: A Pointless Undertaking?

Judith Chevalier and Fiona Scott Morton

No 12012, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We utilize a new micro dataset of prices of funeral goods and services at individual funeral homes, plus data from the Census to examine the effects of state regulations that restrict entry into 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 compete with funeral homes in the sale of caskets. However, as caskets and funeral services are complements, generally purchased in one-to-one proportions, it is not a priori clear that casket sale 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 funeral goods sales are lifted.

JEL-codes: L0 (search for similar items in EconPapers)
Date: 2006-02
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Note: IO
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Published as Chevalier, Judith A. and Fiona M. Scott Morton. “State Casket Sales Restrictions: a Pointless Undertaking?” The Journal of Law and Economics 51, 1 (2008): 1-23.

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