Quasi-Experimental Price Elasticity of Liquor Demand in the United States: 1960-83
American Journal of Agricultural Economics, Vol. 72, No. 2, pp. 451-454, 1990
Posted: 24 Sep 2014 Last revised: 5 Apr 2016
Date Written: 1990
This paper uses sixty-five recent tax changes on liquor in private licensed states over the period 1960-83 to update Simon's quasi-experimental price elasticity of liquor. Three alternative measures for liquor prices are used, and the sensitivity of this price elasticity to border effect purchases as well as market changes over time are examined. Our results support a liquor price elasticity estimate of -.7. However, the confidence interval on this estimate is wide. Border effect purchases as well as changes in the liquor market over time are statistically insignificant.
Keywords: bootlegging, liquor demand, quasi-experimental price elasticity
JEL Classification: D12
Suggested Citation: Suggested Citation