Online competition might lower wine prices

Oct. 15, 2007 at 2:23 PM
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COLUMBUS, Ohio, Oct. 15 (UPI) -- An Ohio State University study suggested an effective way to significantly reduce the U.S. price of wine is to eliminate trade barriers between states.

Researchers found that brick-and-mortar wine stores near one Virginia town charged significantly more than online stores in 2002, when interstate shipping of alcohol directly to consumers was illegal in the state. But the price difference shrunk nearly 40 percent by 2004, after interstate shipping was legalized.

"Consumers are better off when local stores have to compete with online sellers," said Assistant Professor Alan Wiseman, co-author of the study. "Virginia merchants reduced their prices to meet online competition and I think the same thing would happen in other parts of the country if the laws allowed."

Wine sales in the United States have increased for 13 consecutive years, totaling $27.8 billion during 2006, according to the Wine Institute.

Wiseman conducted the new study with Jerry Ellig of George Mason University. Their findings appeared in The Journal of Politics.

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