Liquor stores have captured the market for cold beer in Indiana

Previously in class, we have discussed Stigler’s capture theory, in which an industry will utilize its political power to try and acquire regulations that will benefit their economic profits. This often occurs through campaign donations and other types of “legal” (often illegal) bribes and favors to politicians that will convince the politician to act and vote in the industry’s interest.

Indiana has a law that has consistently been protected by state legislators, which restricts certain businesses from selling cold beer. The ability to sell cold beer in Indiana is exclusive to only liquor stores, while grocery and convenience stores are restricted to only selling warm beer. This is obviously very significant because anyone who would like to purchase a cold case of beer for day-of drinking must go to a liquor store in order to avoid waiting for the beer to cool in the fridge. Personally, I don’t think I’ve ever bought beer from a liquor store, so this seems sort of crazy to me, and I imagine grocery stores, especially, suffer the most economic consequences of this law. Liquor store owners in Indiana have donated large amounts of money to campaign funds in order to keep this bill in place, and as a result their profits must be much higher.