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Bidding in Competition: Wholesale Alcohol Markups under Changing Liquor Laws

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  • Roach, Travis
  • Maisch, John
  • Pokharel, Suvechhya

Abstract

In this research, we examine a repeated pricing game that occurred for more than a decade between wholesale alcohol distributors in Oklahoma. In November of 2016, new liquor laws were voted on and adopted, but the new policies were not set to take eect for nearly two years. Using bi-monthly data from June 2007 to the enacting of new liquor laws in October of 2018, we show that rm behavior moved contrary to game theoretic expectations. Using this natural policy experiment setting, we show that wholesale markups steadily increased for both spirits and cordials following the passing of the new law until the nal stage of the game, when the wholesale distribution system changed after the enacting of new laws.

Suggested Citation

  • Roach, Travis & Maisch, John & Pokharel, Suvechhya, 2020. "Bidding in Competition: Wholesale Alcohol Markups under Changing Liquor Laws," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 50(01), September.
    • Handle: RePEc:ags:jrapmc:339943
    DOI: 10.22004/ag.econ.339943
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    References listed on IDEAS

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    4. Cooper, James C. & Wright, Joshua D., 2012. "Alcohol, antitrust, and the 21st Amendment: An empirical examination of post and hold laws," International Review of Law and Economics, Elsevier, vol. 32(4), pages 379-392.
    5. Saffer, Henry & Gehrsitz, Markus, 2016. "The effect of post-and-hold laws on alcohol consumption," International Review of Law and Economics, Elsevier, vol. 45(C), pages 63-71.
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