Regulation and purchase diversity: Empirical evidence from the U.S. alcohol market

Shuay-Tsyr Ho and Bradley J. Rickard

International Review of Law and Economics, 2021, vol. 68, issue C

Abstract: The repeal of the Prohibition Act in 1933 introduced state-level regulations on the retail availability of alcoholic beverages. Recently there has been much debate among industry stakeholders on how changes to these laws will affect consumer choices. We develop an index to measure purchase diversity for alcoholic beverages that considers similarities in product attributes. Following a set of households that moved between regulatory environments during the 2004 to 2016 period, we examine the effect of alcohol availability on purchase diversity. Our key finding shows that consumers further diversify their product selections in states that allow alcohol sales in grocery stores.

Keywords: Alcoholic beverages; Consumer behavior; Diversification index; Regulation; Retail availability (search for similar items in EconPapers)
JEL-codes: D12 H73 L51 L66 Q18 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:68:y:2021:i:c:s0144818821000326

DOI: 10.1016/j.irle.2021.106008

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