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Markets: Beer in Germany and the United States

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  • William James Adams

Abstract

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.

Suggested Citation

  • 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.
  • Handle: RePEc:aea:jecper:v:20:y:2006:i:1:p:189-205
    Note: DOI: 10.1257/089533006776526120
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/089533006776526120
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    References listed on IDEAS

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    Cited by:

    1. repec:anr:reseco:v:10:y:2018:p:105-132 is not listed on IDEAS
    2. Kym Anderson & Giulia Meloni & Johan Swinnen, 2018. "Global Alcohol Markets: Evolving Consumption Patterns, Regulations, and Industrial Organizations," Annual Review of Resource Economics, Annual Reviews, vol. 10(1), pages 105-132, October.
    3. 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.
    4. Simon Pröll & Giannis Karagiannis & Klaus Salhofer, 2019. "Advertising and Markups: The Case of the German Brewing Industry," Working Papers 732019, Institute for Sustainable Economic Development, Department of Economics and Social Sciences, University of Natural Resources and Life Sciences, Vienna.
    5. Madsen, Erik S. & Pedersen, Kurt & Lund-Thomsen, Lars, 2012. "Effects of the M&A Wave in the Global Brewing Industry 2000-2010," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(4).
    6. Satish Y. Deodhar & Vivek Pandey, 2008. "Degree of Instant Competition! Estimation of Market Power in India’s Instant Coffee Market," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 43(2), pages 253-264, December.
    7. Ramit Mehta & Dirk Schiereck, 2012. "The Consolidation Of The Global Brewing Industry And Wealth Effects From Mergers And Acquisitions," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 6(3), pages 67-87.
    8. repec:ags:aolpei:254029 is not listed on IDEAS
    9. Empen, Janine & Glauben, Thomas & Loy, Jens-Peter, 2012. "Spatial Retail Pricing Strategies For Beer In Germany," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137150, German Association of Agricultural Economists (GEWISOLA).
    10. 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.
    11. 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.
    12. repec:ags:gjagec:199783 is not listed on IDEAS
    13. Dreyer, Heiko & Fedoseeva, Svetlana & Herrmann, Roland, 2016. "Gravity Meets Pricing To Market: What A Combinedmethod Approach Tells Us On German Beer Exports," Working Papers 234640, American Association of Wine Economists.

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