Title

Efficiencies Brewed: Pricing and Consolidation in the US Beer Industry

Author(s)

Orley C. Ashenfelter Orley Ashenfelter (Princeton University)

Daniel Hosken Daniel Hosken (Federal Trade Commission)

Matthew C. Weinberg Matthew Weinberg (Drexel University)

Abstract

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 Miller and Coors breweries was expected to increase concentration and reduce costs. All else equal, the average predicted increase in concentration lead to price increases of two percent, but at the mean this was offset by a nearly equal and opposite efficiency effect.

Creation Date

2013-11

Section URL ID

Paper Number

2013-1

URL

https://www.nber.org/system/files/working_papers/w19353/w19353.pdf

File Function

Jel

K21, L1, L4

Keyword(s)

Food, Beverages, Cosmetics, Tobacco, Wine and Spirits (L66), U.S., Northern America, Beer, Concentration, Cost, Merger, Prices, Pricing

Suppress

false

Series

13