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Post and hold regulation and competitive conduct: Evidence from the U.S. beer industry

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  • Gayle, Philip G.
  • Faheem, Adeel

Abstract

The literature argues that Post and Hold (pH) laws facilitate tacit collusive price-setting behavior among suppliers of alcoholic beverages. Yet there is no explicit empirical test of this claim. We specify and estimate a structural model designed to identify the extent to which pH laws induce tacit collusive price-setting behavior among beer suppliers. Our estimates reveal evidence of pH law-induced collusive behavior that causes higher prices and lower consumption. Furthermore, we find that an alcohol content tax as a replacement for pH regulation yields the highest surplus to consumers compared to a sales tax or the pH regulation.

Suggested Citation

  • Gayle, Philip G. & Faheem, Adeel, 2024. "Post and hold regulation and competitive conduct: Evidence from the U.S. beer industry," International Journal of Industrial Organization, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:indorg:v:97:y:2024:i:c:s0167718724000717
    DOI: 10.1016/j.ijindorg.2024.103116
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    More about this item

    Keywords

    Post and hold regulation; Competitive conduct; U.S. beer industry; Externality; Corrective tax policy;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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