Efficiencies Brewed: Pricing and Consolidation in the U.S. Beer Industry
AbstractMerger efficiencies provide the primary justification for why mergers of competitors may benefit consumers. Surprisingly, there is little evidence that efficiencies can offset incentives to raise prices following mergers. We estimate the effects of increased concentration and efficiencies on pricing by using panel scanner data and geographic variation in how the merger of Miller and Coors breweries was expected to increase concentration and reduce costs. All else equal, the average predicted increase in concentration lead to price increases of two percent, but at the mean this was offset by a nearly equal and opposite efficiency effect.
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Date of creation: Aug 2013
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- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L4 - Industrial Organization - - Antitrust Issues and Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-09-28 (All new papers)
- NEP-COM-2013-09-28 (Industrial Competition)
- NEP-EFF-2013-09-28 (Efficiency & Productivity)
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