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STATE LIQUOR LICENSING, IMPLICIT CONTRACTING, AND DRY/WET COUNTIES
Author(s) -
Toma Eugenia Froedge
Publication year - 1988
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1988.tb01512.x
Subject(s) - state (computer science) , economics , law , business , political science , mathematics , algorithm
Local option liquor laws are generally interpreted as granting voters the right to choose between allowing and prohibiting alcoholic beverage sales. This paper argues that the real choice confronting voters is between legal sales according to state‐prescribed rules and illegal sales according to an informal set of locally‐determined rules. Given this choice, rational voters will choose the option with the lower relative price. State laws restricting the number of licenses that can be issued in legally wet jurisdictions prove to be more powerful than religious preferences in explaining the pattern of dry counties.