Funeral Home Regulations Should be Buried
May 23, 2003
Regulatory protection of rents and the status quo can happen in almost any market, including ones that are not often discussed but that are very important to us as human beings. One such example is the market for funeral-related goods and services.
Important changes are occurring in funeral markets, including the emergence of online sales of caskets and the growing popularity of cremation. However, one feature of funeral markets that has changed very little over the last half-century is the stringent regulation of those markets by many states.
- There are a large number of state funeral regulations that impede competition in funeral markets, including facility requirements, training requirements and statutes that designate the sale of caskets as being within the province of funeral directors only.
- Many of those regulations impede the sale of caskets online as well as the entry of new firms, especially those specializing in low-cost alternatives to the traditional funeral.
State statues in Georgia, Oklahoma and Tennessee that prohibit anyone other than licensed funeral directors from selling caskets have been challenged in court recently.
- A federal district court upheld the Oklahoma statute last December in the case of Powers v. Harris, ruling that federal courts should defer to the judgment of state legislatures concerning the regulation of caskets.
- In the same month, a federal appeals court found the Tennessee statute unconstitutional in the case of Craigmiles v. Giles, concluding that it was a "naked attempt to raise a fortress protecting the monopoly rents that funeral directors extract from consumers."
Overturning those statues should increase the amount of competition in funeral markets. However, if those are the only types of state funeral regulations that are repealed or reformed, do not be surprised if there are still excessively large numbers at the bottom of consumer's funeral bills.
Source: David E. Harrington, "Breathing Life into the Funeral Market," Vol. 26, No. 1, Spring 2003, Regulation.
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