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The Dynamics of Industry Concentration for U.S. Micro and Macro Brewers

Author

Listed:
  • Victor Tremblay
  • Natsuko Iwasaki
  • Carol Tremblay

Abstract

In this update we document the changes in industry concentration of macro and micro brewers in the U.S. brewing industry since 1970. Technological change and the continued success of Anheuser–Busch forced the macro brewers into a war-of-attrition game and contributed to rising concentration in the macro sector of the industry. Homogenization of the beer produced by macro brewers, changes in local demand conditions, and a more favorable regulatory environment created profitable niches in many local markets for micro brewery beer, and entry into this sector occurred at a phenomenal rate from 1977 to 1998. Consistent with several models of industry dynamics, over-exuberance led to a shakeout as the number of micro breweries fell by over 16% from 1998 to 2002. Copyright Kluwer Academic Publishers 2005

Suggested Citation

  • Victor Tremblay & Natsuko Iwasaki & Carol Tremblay, 2005. "The Dynamics of Industry Concentration for U.S. Micro and Macro Brewers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 26(3), pages 307-324, December.
    • Handle: RePEc:kap:revind:v:26:y:2005:i:3:p:307-324
    DOI: 10.1007/s11151-004-8114-9
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    References listed on IDEAS

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    1. Ulrich Doraszelski & Sarit Markovich, 2004. "Advertising Dynamics and Competitive Advantage," Econometric Society 2004 North American Summer Meetings 162, Econometric Society.
    2. Kenneth Elzinga & Anthony Swisher, 2005. "The Supreme Court and Beer Mergers: From Pabst/Blatz to the DOJ–FTC Merger Guidelines," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 26(3), pages 245-267, December.
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    Citations

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    Cited by:

    1. Sidartha Gordon & Emeric Henry & Pauli Murto, 2021. "Waiting for my neighbors," RAND Journal of Economics, RAND Corporation, vol. 52(2), pages 251-282, June.
    2. Giannis Karagiannis & Magnus Kellermann & Simon Pröll & Klaus Salhofer, 2018. "Markups and product differentiation in the German brewing sector," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 61-76, December.
    3. Karim Marini Thome & Janan Joslin Medeiros & Juciara Nunes de Alcântara, 2019. "Rescuing the Industry-Based Competition to Determine the Performance of Foreign Subsidiaries in the Brazilian Host Market," Global Business Review, International Management Institute, vol. 20(1), pages 13-24, February.
    4. repec:zbw:inwedp:682017 is not listed on IDEAS
    5. Toro-Gonzalez, Daniel & McCluskey, Jill J. & Mittelhammer, Ron, 2014. "Beer Snobs Do Exist: Estimation of Beer Demand by Type," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(2), pages 1-14.
    6. Bart Bronnenberg & Jean-Pierre Dubé & Joonhwi Joo, 2022. "Millennials and the Takeoff of Craft Brands: Preference Formation in the U.S. Beer Industry," Marketing Science, INFORMS, vol. 41(4), pages 710-732, July.
    7. repec:hal:spmain:info:hdl:2441/3lcrvb72lq9f08o6s7j1m8j4d7 is not listed on IDEAS
    8. Vivek Farias & Bar Ifrach & Gabriel Weintraub, 2012. "A Framework for Dynamic Oligopoly in Concentrated Industries," 2012 Meeting Papers 505, Society for Economic Dynamics.
    9. Witham, Adam & Leite, Brian, 2023. "Business is Hopping: The Effects of Deregulation on Southern Craft Beer," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 53(1), January.
    10. Maria Cipollaro & Sara Fabbrizzi & Veronica Alampi Sottini & Bruno Fabbri & Silvio Menghini, 2021. "Linking Sustainability, Embeddedness and Marketing Strategies: A Study on the Craft Beer Sector in Italy," Sustainability, MDPI, vol. 13(19), pages 1-17, September.
    11. Ewa, Lechman, 2010. "Concentration in ICTs sector – cross country analysis," MPRA Paper 37488, University Library of Munich, Germany.
    12. Natsuko Iwasaki & Barry Seldon & Victor Tremblay, 2008. "Brewing Wars of Attrition for Profit (and Concentration)," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 33(4), pages 263-279, December.
    13. Burgdorf, Jacob, 2019. "Impact of mandated exclusive territories in the US brewing industry: Evidence from scanner level data," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 376-416.
    14. Nesse, Katherine & Green, Timothy & Ferguson, Brooke, 2019. "Quality of Life in Potential Expansion Locations is Important to Craft Brewers," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 49(1), January.
    15. Maier, Tomas, 2013. "Selected Aspect of the Microbreweries Boom," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 5(4), pages 1-8, December.
    16. K.M. Thomé & A.B.P. Soares, 2015. "International market structure and competitiveness at the malted beer: from 2003 to 2012," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 61(4), pages 166-178.
    17. Monika Březinová, 2021. "Beer Industry in the Czech Republic: Reasons for Founding a Craft Brewery," Sustainability, MDPI, vol. 13(17), pages 1-12, August.
    18. Giannis Karagiannis & Magnus Kellermann & Simon Pröll & Klaus Salhofer, 2018. "Markups and product differentiation in the German brewing sector," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 61-76, December.
    19. repec:hal:wpspec:info:hdl:2441/3lcrvb72lq9f08o6s7j1m8j4d7 is not listed on IDEAS
    20. Loretz, Simon & Oberhofer, Harald, 2014. "When Helping the Small Hurts the Middle: Beer Excise Duties and Market Concentration," Working Papers in Economics 2014-5, University of Salzburg.
    21. Erik Strøjer Madsen & Yanqing Wu, 2014. "Globalization of Brewing and Economies of Scale," Economics Working Papers 2014-23, Department of Economics and Business Economics, Aarhus University.
    22. Radovan Savov & Xénia Szarková, 2022. "Craft beer revolution: formation of a new segment in Slovakia," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(1), pages 225-246, March.

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    More about this item

    Keywords

    brewing industry; concentration; micro breweries; L11 and L66;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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