State Casket Sales Restrictions: A Pointless Undertaking?

We utilize a new micro data set of prices of funeral goods and services at individual funeral homes, plus data from the Economic Census, to examine the effects of state regulations that restrict entry into the funeral goods market. In particular, some states have regulations that allow only licensed...

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Bibliographic Details
Published in:The Journal of law & economics 2008-02, Vol.51 (1), p.1-23
Main Authors: Chevalier, Judith A., Morton, Fiona M. Scott
Format: Article
Language:English
Subjects:
Appellate courts
Capital goods
Caskets
Censuses
Coefficients
Coffins
Consumer goods
Consumer protection
Consumer spending
Cremation
Enterprises
Funeral homes
Funerals
Goods
Market
Monopolies
Prices
Rents
Restrictive business practices
Retail sales
Retail stores
Sales
State regulation
Studies
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Summary:We utilize a new micro data set of prices of funeral goods and services at individual funeral homes, plus data from the Economic Census, to examine the effects of state regulations that restrict entry into the funeral goods market. In particular, some states have regulations that allow only licensed funeral homes to sell caskets, while others allow unlicensed retailers, such as Costco, to sell them. However, as caskets and funeral services are complements, generally purchased in one‐to‐one proportions, it is not a priori clear that casket sales restrictions can expand the rent extraction capabilities of licensed funeral homes. Our results suggest that when courts lift funeral goods sales restrictions, the prices of funeral goods fall but the prices of funeral services rise by nearly as much. Overall, our results support the one‐monopoly‐rent hypothesis; we do not find that, overall, funeral home revenues decline when restrictions on funeral goods sales are lifted.
ISSN:0022-2186
1537-5285
DOI:10.1086/588595