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Markets: Beer in Germany and the United States

  • William James Adams

Between 1950 and 2000, the four-firm producer-concentration ratio for beer increased from 22 to 95 in the United States; and Anheuser-Busch's share of domestic output ballooned from 6 to 54 percent. In Germany, concentration has risen, but it remains low. In 2000, the four-firm producer-concentration ratio was just 29; and the eight-firm ratio in Germany was smaller than the one-firm ratio in the United States. In 2005, after five years of important mergers involving big brewers, the German beer industry was still much less concentrated than its American counterpart. In this article, I discuss several candidate explanations for the failure of beer-producer-concentration to rise as much in Germany as in the United States: the relevance of the new technologies to German brewers, the preferences of German consumers, the rules for advertising on German television and other factors, largely absent from the consensus interpretation of American experience. I find that market structure depends on a remarkably broad range of factors, extending well beyond technological opportunity and market size.

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Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 20 (2006)
Issue (Month): 1 (Winter)
Pages: 189-205

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Handle: RePEc:aea:jecper:v:20:y:2006:i:1:p:189-205
Note: DOI: 10.1257/089533006776526120
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  1. Sass, Tim R & Saurman, David S, 1993. "Mandated Exclusive Territories and Economic Efficiency: An Empirical Analysis of the Malt-Beverage Industry," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 153-77, April.
  2. Slade, Margaret E, 1998. "Beer and the Tie: Did Divestiture of Brewer-Owned Public Houses Lead to Higher Beer Prices?," Economic Journal, Royal Economic Society, vol. 108(448), pages 565-602, May.
  3. Pinkse, Joris & Slade, Margaret E., 2004. "Mergers, brand competition, and the price of a pint," European Economic Review, Elsevier, vol. 48(3), pages 617-643, June.
  4. Margaret E. Slade, 2004. "Market Power and Joint Dominance in U.K. Brewing," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 133-163, 03.
  5. 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, vol. 26(3), pages 245-267, December.
  6. Sass, T. & Saurman, D.S., 1993. "Efficiency Effects of Exclusive Territories: Evidence from the Indiana Beer Market," Working Papers 1993_09_03, Department of Economics, Florida State University.
  7. Porter, Michael E, 1976. "Interbrand Choice, Media Mix and Market Performance," American Economic Review, American Economic Association, vol. 66(2), pages 398-406, May.
  8. Jon Nelson, 2005. "Beer Advertising and Marketing Update: Structure, Conduct, and Social Costs," Review of Industrial Organization, Springer, vol. 26(3), pages 269-306, December.
  9. Muller, Jurgen, 1976. "The Impact of Mergers on Concentration: A Study of Eleven West German Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 25(2), pages 113-32, December.
  10. Adams, William James, 1980. "Producer-Concentration as a Proxy for Seller-Concentration: Some Evidence from the World Automotive Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 29(2), pages 185-202, December.
  11. Newman, Howard H, 1978. "Strategic Groups and the Structure-Performance Relationship," The Review of Economics and Statistics, MIT Press, vol. 60(3), pages 417-27, August.
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