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Efficiency Effects of Exclusive Territories: Evidence from the Indiana Beer Market

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  • Sass, Tim R
  • Saurman, David S

Abstract

The welfare effects of vertically imposed exclusive territories and the appropriate antitrust policy toward them have long been debated. This paper sheds light on the exclusive-territory controversy by examining the effects of Indiana's 1979 ban on the grant of exclusive territories to beer wholesalers. Using time-series data for 1948-90, the authors find the ban reduced beer consumption in Indiana by 6 percent. Coupled with previous evidence that Indiana's ban reduced price, their results suggest that exclusive territories in the beer industry increase demand and enhance welfare by stimulating the provision of dealer services. Copyright 1996 by Oxford University Press.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 34 (1996)
Issue (Month): 3 (July)
Pages: 597-615

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Handle: RePEc:oup:ecinqu:v:34:y:1996:i:3:p:597-615

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Cited by:
  1. Cooper, James C. & Wright, Joshua D., 2012. "Alcohol, antitrust, and the 21st Amendment: An empirical examination of post and hold laws," International Review of Law and Economics, Elsevier, vol. 32(4), pages 379-392.
  2. Suzuki, Ayako, 2009. "Market foreclosure and vertical merger: A case study of the vertical merger between Turner Broadcasting and Time Warner," International Journal of Industrial Organization, Elsevier, vol. 27(4), pages 532-543, July.
  3. William James Adams, 2006. "Markets: Beer in Germany and the United States," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 189-205, Winter.
  4. Kálecz-Simon, András & Bakó, Barna, 2012. "Vertikális korlátozások - növelik vagy csökkentik a jólétet?. Érvek az irodalomból
    [Vertical constraints - do they increase or reduce welfare?. Arguments in the literature]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1138-1159.
  5. Cooper, James C. & Froeb, Luke M. & O'Brien, Dan & Vita, Michael G., 2005. "Vertical antitrust policy as a problem of inference," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 639-664, September.

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