The Social and Revenue Effects of State Alcoholic Beverage Control

William E. Spellman and Mark R. Jorgenson

American Journal of Economics and Sociology, 1982, vol. 41, issue 1, 77-83

Abstract: Abstract. The operation of a state monopoly on retail sales of alcoholic beverages is often viewed as an outdated relic of Prohibition. However, the control states have a significantly lower consumption rate per capita and the price level is lower than in open or competitive states. The alcoholism rate is also lower in the control states than in the open states. The alcoholism and consumption conclusions are valid even given regional socioeconomic differences. Even though the prices are lower in control states than open states, the competitive forces in neighboring states cause prices to be lower in the retail outlets on the border; hence, illegal transportation of liquor causes the official consumption rate of the in‐state border counties to be lower than the interior counties. The social and revenue effects of state control make it an effective policy.

Date: 1982
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