Border Crossing to Purchase Alcoholic Beverages

Excise taxes and Sunday sales bans are important interventions in the market for alcoholic beverages. This paper uses time variation in prices, Sunday sales bans, and border populations to identify the effect of these policies on cross state purchases of beer and liquor. The analysis indicates that interstate price differences and Sunday sales bans can account for 0.9 % and 1.1 % of total sales of liquor respectively, but finds no statistically significant effects on sales of beer. Simulations based on the coefficient estimates indicate that border crossing would not undermine the ability of modest tax increases to raise revenue. Analogous simulations for the repeal of Sunday sales bans show that such repeals are likely to lead to fairly substantial increases in sales, but that the effect of such repeals is diminished if neighboring states also repeal their bans. 1