Tied House Rules: Mythical Excuse for Regulation?
My colleague Michelle Minton raises a provocative, yet convincing case that modern-day laws supporting three-tier mandates for alcohol regulation are based more on myth than reality. These laws mandate that all alcohol must go from wholesaler to distributor before sale to a retailer.
Before Prohibition, saloons were often tied to alcohol producers either through contractual arrangements or direct ownership. Members of the Temperance movement believed that these economic arrangements contributed to social problems related to alcohol abuse, prostitution, and criminal activity. It is not clear that market structure was the source of such problems, which more likely have cultural roots. Nonetheless, concerns about such ties between suppliers and retailers were a key impetus for states adopting a mandatory three-tier system after Prohibition ended.
Minton argues that it’s time to get over the myth that tied-house rules promoted alcohol abuse. It offers no excuse for public policies promoting anti-competitive, three-tier mandates. Check out her letter in the Detroit News on this topic and her blog post on open-market.org, which offers more details. She also has a lengthy piece published by the Mackinac Center for Public Policy worth reading.