Suppose a state law is passed which prohibits the state liquor board from issuing any new liquor licenses. (Such licenses are required to sell liquor.)The law would allow prospective tavern operators to purchase an existing license on the open market from a willing current owner of such a license.Which outcome would you expect to result from this regulation?

Question

Quizplus · Accepted Answer

By prohibiting the issuance of new liquor licenses while allowing the sale of existing ones, the law restricts the supply of licenses. This scarcity increases the value of existing licenses, leading to an increase in economic rent for current holders.

Suppose a State Law Is Passed Which Prohibits the State