Some states regulate the sale of caskets, only allowing funeral homes to sell them. Other states allow casket sales by other retailers (e.g., Costco). My initial impression: the cost of caskets (and thus the overall cost of funeral services) will be lower in unregulated states. This makes sense: increased competition reduces prices. In their recent Journal of Law and Economics paper, Judith Chevalier and Fiona M. Scott Morton (Yale) show why my initial intuition is wrong.
Although increasing casket competition decreases the price of caskets, that doesn't mean a drop in the overall price of a funeral. This is because you still need to hire someone to organize the funeral and bury the casket, services for which funeral homes do not face competition. To offset the lower price of caskets, funeral homes increase the price of other services, keeping their revenue and the end price of a funeral roughly the same. Since people buy caskets and funeral services together, increasing competition on only one of the dimensions doesn't reduce the market power of funeral homes overall.
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