Weddingnomics: Pennsylvania Catering Edition

None for the caterers!

Photo by OLIVER KILLIG/AFP/Getty Images

As a fairly recently engaged person, I have a newfound interest in the curious economics of weddings in America. Jon Geeting is in the same boat and observing a Pennsylvania regulatory conundrum. Until recently the rule in PA was simply that a catering company couldn’t be a booze supplier. You could pay your food caterers to serve booze at your event, but the event organizer had to purchase and transport the booze separately from a licensed booze retailer. But then along came a partial deregulation, as the state legislature decided to allow bars that have liquor licenses and side catering businesses to also get off-premises liquor licenses.

As is often the case with partial deregulation, this has in some ways made the economic distortion even worse. Under the old system, liquor distributors got some rents at the expense of everyone else but the catering world was at least a level playing field. Now the rents have been partially dissipated, but licensed restaurant/catering combo operations have a weird regulatory leg up on freestanding caterers that serves, among other things, as a possible barrier to entry into the catering business.

The Moneybox Preferred Solution for state alcoholic beverage licensing is to be extremely liberal about who is allowed to sell booze, and express concern for revenue or public health through high taxes. That way the rents accrue back to the state treasury allowing for lighter taxation of general retail sales.