December 8, 2009

Effects on Wine Sales, Tax Revenue, and Consumer Welfare

Tennessee Joint Study Committee on Wine in Grocery Stores
Key materials
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In his testimony before the Tennessee Joint Study Committee on Wine in Grocery Stores, Senior Research Fellow Jerry Ellig argues that restrictions ought not be imposed on competition unless the restrictions accomplish some clear public purpose. Furthermore, the restriction should be no more severe than necessary to accomplish the public purpose, for this helps ensure that the government accomplishes its policy goal at the lowest possible cost to consumers.


Limiting wine sales to liquor stores imposes significant costs on consumers that are unnecessary to accomplish the state’s objectives of preventing underage drinking and collecting tax revenues. Indeed, it is clear that current policy diminishes state and local tax revenues while harming consumers.