This is the Cato Daily Podcast for Friday, April 23rd, 2010.

I'm Caleb Brown.

The Interstate shipment of wine has challenged the state-based monopoly power of wine

distributors. The economics of

distribution seem fairly clear. In this case the middleman probably wouldn't

exist were it not for that government guarantee. Peter Van Doren, editor of Regulation magazine at Cato Institute Senior Fellow, offers his thoughts.

After prohibition a the made concern of policy makers was to keep organized crime out of the liquor and wine and

beer distribution business and so a three- tier system developed for alcohol

after prohibition ended.

And they were, the three tiers were the,

one was the producers, be it the beer or alcohol or wine producers.

In the middle were wholesalers and they were companies that were vetted to be and assured to be free of organized crime influenced by the FBI,

Jager Hoover at the time.

So in effect, it was a complicated entry barrier system to get rid of the previous distribution channel that existed during prohibition.

And then finally retailers that served consumers directly.

As normal distribution of alcohol developed culturally after prohibition ended, the mob's role

in this went down of course and they were prohibited but also the rents were gone the profits were gone

Although a source of profit now was state taxation so that the state in effect tried to much less so the

feds but the states in effect tried to capture some of the rents that were in

alcohol for public purposes rather than for the mob.

The rents going away was sort of an inevitable result after the end of prohibition and And I guess in the short run,

I could understand why you would want

...