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Efficiencies brewed: pricing and consolidation in the US beer industry

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Listed:
  • Orley C. Ashenfelter
  • Daniel S. Hosken
  • Matthew C. Weinberg

Abstract

type="main"> Merger 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 the brewers Miller and Coors was expected to increase concentration and reduce costs. All else equal, the average predicted increase in concentration led to price increases of 2%, but at the mean this was offset by a nearly equal and opposite efficiency effect.

Suggested Citation

  • Orley C. Ashenfelter & Daniel S. Hosken & Matthew C. Weinberg, 2015. "Efficiencies brewed: pricing and consolidation in the US beer industry," RAND Journal of Economics, RAND Corporation, vol. 46(2), pages 328-361, June.
    • Handle: RePEc:bla:randje:v:46:y:2015:i:2:p:328-361
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    File URL: http://hdl.handle.net/10.1111/1756-2171.12092
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    More about this item

    JEL classification:

    • 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

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