Constraining Rivals : The Effect of State-Mandated Facility Requirements on the Locations and Sizes of Funeral Homes

Thirty-four states require death-care firms that specialize in low-cost cremations to have embalming rooms, despite the fact that such firms have no use for them. Many states also require death-care firms to have chapels and casket display rooms. We test whether such requirements affect funeral markets where critics of the regulations claim they do the most harm by artificially suppressing the number of small funeral homes. We focus on Arizona and Florida because Arizona imposes more demanding facility requirements on funeral homes and cremation specialists than Florida does. We present evidence that Arizona's more extensive facility requirements reduce the number of very small funeral homes and prevent them from locating in shopping centers; these requirements also increase funeral prices. These increasingly antiquated laws have created thousands of dormant embalming rooms across the country and have increased consumer costs while providing few if any discernible benefits