This month’s issue of the journal Regulation, also contains another article by yours trule (co-authored with Jerry Ellig and Asheesh Agarwal) on the policy considerations involved in the Supreme Court cases involving the direct shipment of wine. The article draws on empirical and other evidence to describe the benefits to consumers from direct wine shipment and the weakness of the policy arguments for protectionism. (It also has a funny graphic that the editor’s added in). The article can be found on the web in the “Mercatus Reports” Section of Regulation, as one of my co-authors is a Senior Research Fellow at Mercatus. You can find the article , then scroll down to pages 10-11 of the magazine (pages 7-8 of the pdf file) to find our short article.
We also point out in our conclusion, this case has serious implications for e-commerce in all products, from Amazon.com to LLBean, in that either of the two routes to affirmance by the Supreme Court are plagued with difficulties.
First, the court could hold that the laws are nondiscriminatory because of the availability of a “physical presence” requirement. This would be most disastrous of all, as it would imply that a state could require Amazon.com, for instance, to establish a physical presence in the state in order to sell books there so that the state could effectively enforce its consumer protection laws.
Second, the court could hold that these laws are discriminatory, but nevertheless saved by the 21st Amendment. Thought perhaps not disastrous on the same scale, this justification would be troubling as well, in that it would signal a retreat from the Court’s traditional commitment to the internal free flow of goods. Perhaps equally troubling, if the Court were to uphold this discrimination, in this case it would be doing so on the basis of a virtual absence of any evidence to justify the discrimination. From the beginning, the Court has insisted that discriminatory bans to commerce be permitted only after a strong evidentiary showing that the discrimination is the only way to address the claimed problem and that it is the least-restrictive means of doing so. Here, there is simply no evidence to support the discriminatory ban, our article describes the evidence on the other side.
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