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Market and Nonmarket Barriers to Internet Wine Sales: The Case of Virginia

Published online by Cambridge University Press:  20 January 2017

Alan E. Wiseman  and
Jerry Ellig
Alan E. Wiseman
Affiliation:
The Ohio State University
Jerry Ellig
Affiliation:
Mercatus Center at George Mason University
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Abstract

We discuss the political and legal environment surrounding Internet wine sales, and consider the arguments in the debate over direct shipment bans on wine by investigating the wine market in the Northern Virginia suburbs of Washington, DC. Using a sample of wines identified by Wine and Spirits magazine's annual restaurant poll, we find that 15 percent of wines available online were not available from retail wine stores within 10 miles of McLean, Virginia during the month the data were collected. Our results also indicate that Virginia's direct shipment ban, which was in place until 2003, prevented consumers from purchasing some premium wines at lower prices online. Aggregate cost savings depends on the consumer's shopping strategy, the price per bottle, the quantity of wine ordered, and the shipping method chosen. For the entire sample, online purchase could result in an average savings of as much as 3.6 percent or an average premium of as much as 48 percent. A comparison shopper who considers both online and offline retailers could save an average of 1.6-9.7 percent. These results help explain why consumers and producers have found it worthwhile to challenge interstate direct shipment bans, which tend to benefit wine wholesalers.

Keywords

Electronic CommerceWineState RegulationInterest Group Politics21st Amendment
Type
Research Article
Information
Business and Politics , Volume 6 , Issue 2 , August 2004 , pp. 1 - 34
Copyright
Copyright © V.K. Aggarwal 2004 and published under exclusive license to Cambridge University Press 

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