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Brewing up entrepreneurship: government intervention in beer

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  • Trey Malone
  • Jayson L. Lusk

Abstract

Purpose - While previous studies have looked at the negative consequences of beer drinking often as a prelude to discussing benefits of laws that curtail consumption, the purpose of this paper is to understand the downside of such regulations insofar as reducing entrepreneurial activity in the brewing industry. Design/methodology/approach - Using a unique data set from the Brewers’ Association that contains information on the number and type of brewery in each county, this study explores the relationship between the number of breweries and regulations targeted at the brewing industry. Zero-inflated negative binomial regressions are used to determine the relationship between the number of microbreweries and brewpubs per county and state beer taxes, self-distribution legislation, and on-premises sales. Findings - The authors find that allowing breweries to sell beers on-premises as well as allowing for breweries to self-distribute have statistically significant relationships with the number of microbreweries, brewpubs, and breweries. The authors do not find an economically significant relationship between state excise taxes and the number of breweries of any type. Originality/value - Results suggest that whatever public health benefits are brought about by alcohol laws, they are not a free lunch, as they may hinder entrepreneurial development.

Suggested Citation

  • Trey Malone & Jayson L. Lusk, 2016. "Brewing up entrepreneurship: government intervention in beer," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 5(3), pages 325-342, November.
    • Handle: RePEc:eme:jepppp:jepp-02-2016-0004
    DOI: 10.1108/JEPP-02-2016-0004
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    Cited by:

    1. Staples, Malone & Chambers, Dustin & Malone, Trey, 2020. "The economic geography of beer regulations," Center for Growth and Opportunity at Utah State University 307180, Center for Growth and Opportunity.
    2. Trey Malone & Jayson L. Lusk, 2019. "Releasing The Trap: A Method To Reduce Inattention Bias In Survey Data With Application To U.S. Beer Taxes," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 584-599, January.
    3. Kym Anderson & Giulia Meloni & Johan Swinnen, 2019. "Global Alcohol Markets: Evolving Consumption Patterns, Regulations, and Industrial Organizations," World Scientific Book Chapters, in: Kym Anderson (ed.), The International Economics of Wine, chapter 26, pages 671-712, World Scientific Publishing Co. Pte. Ltd..
    4. Trey Malone & Jayson L. Lusk, 2018. "If you brew it, who will come? Market segments in the U.S. beer market," Agribusiness, John Wiley & Sons, Ltd., vol. 34(2), pages 204-221, March.
    5. Jeffrey K. O'Hara & Marcelo Castillo & Dawn Thilmany McFadden, 2021. "Do Cottage Food Laws Reduce Barriers to Entry for Food Manufacturers?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(3), pages 935-951, September.
    6. Aaron J. Staples & Trey Malone & J. Robert Sirrine, 2021. "Hopping on the localness craze: What brewers want from state‐grown hops," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 463-473, March.
    7. Trey Malone & Dustin Chambers, 2017. "Quantifying Federal Regulatory Burdens in the Beer Value Chain," Agribusiness, John Wiley & Sons, Ltd., vol. 33(3), pages 466-471, June.
    8. Nesse, Katherine & Green, Timothy & Ferguson, Brooke, 2019. "Quality of Life in Potential Expansion Locations is Important to Craft Brewers," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 49(1), January.
    9. Stephan F. Gohmann, 2016. "Why Are There so Few Breweries in the South?," Entrepreneurship Theory and Practice, , vol. 40(5), pages 1071-1092, September.
    10. Jeff Luckstead & Stephen Devadoss, 2021. "Taste renaissance, tax reform, and industrial organization of the beer industry," Economic Inquiry, Western Economic Association International, vol. 59(4), pages 1702-1722, October.
    11. Howard, Philip H., 2018. "Craftwashing in the U.S. Beer Industry," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 4(1), pages 1-13.
    12. Trey Malone & Josh Hall, 2017. "Can liberalization of local food marketing channels influence local economies? A case study of West Virginia’s craft beer distribution laws," Economics and Business Letters, Oviedo University Press, vol. 6(2), pages 54-58.
    13. Aaron J. Staples & Dustin Chambers & Trey Malone, 2022. "How many regulations does it take to get a beer? The geography of beer regulations," Regulation & Governance, John Wiley & Sons, vol. 16(4), pages 1197-1210, October.
    14. Rosa Maria Fanelli, 2018. "Have beer markets in European Union countries converged?," Economia agro-alimentare, FrancoAngeli Editore, vol. 20(3), pages 445-477.
    15. Witham, Adam & Leite, Brian, 2023. "Business is Hopping: The Effects of Deregulation on Southern Craft Beer," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 53(1), January.
    16. Wesley Blundell & Kyle Wilson, 2023. "Acquisitions, product variety, and distribution in the U.S. craft beer industry," Economic Inquiry, Western Economic Association International, vol. 61(4), pages 1053-1076, October.
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