Fiscal impacts and cross-border effects of a change in state liquor policy

Abstract

This paper analyzes the economic effects of the 2012 change in liquor policy (Initiative 1183) in Washington State in the United States. This policy increased the availability of liquor but also increased taxes on liquor in Washington. This research provides some evidence that the quantity of liquor sold in both Washington and Idaho increased, suggesting that availability/convenience effects can outweigh tax/price effects. Furthermore, the cross-border spillover effects are isolated to the nearest store to the border.