Abstract
The literature argues that Post and Hold (pH) laws facilitate tacit collusive price-setting behavior among suppliers of alcoholic beverages. Yet there is no explicit empirical test of this claim. We specify and estimate a structural model designed to identify the extent to which pH laws induce tacit collusive price-setting behavior among beer suppliers. Our estimates reveal evidence of pH law-induced collusive behavior that causes higher prices and lower consumption. Furthermore, we find that an alcohol content tax as a replacement for pH regulation yields the highest surplus to consumers compared to a sales tax or the pH regulation.
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