Friday, July 23, 2010

The effects of "post and hold" laws

Post and Hold laws generally require that alcohol distributors “post” their proposed prices in advance, thus sharing future prices with rival distributors before they go into effect, and then “hold” these prices for a specified period of time.  These laws make price competition less profitable, and the industry less competitive.  They also have an effect on output:
  • consumers in states with PH laws consume between 2-8 percent less  alcohol. 
  • PH laws have no effect on drunk driving accidents and various measures of teen drinking. 
Bottom line:  these laws appear to have costs but no benefits.

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