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Market Power and Joint Dominance in U.K. Brewing

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  • Margaret E. Slade

Abstract

Market power and joint dominance are examined in U.K. brewing. I assess unilateral and coordinated effects, where the latter is equated with joint dominance, and show how one can distinguish between the two econometrically. The application makes use of two demand equations: the nested logit of McFadden [1978a] and the distance‐metric of Pinkse, Slade, and Brett [2002]. The two equations yield very different predictions concerning elasticities and markups. Nevertheless, although there is evidence of market power using either demand model, that power is due entirely to unilateral effects. In other words, neither model uncovers evidence of coordinated effects (tacit collusion).

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  • Margaret E. Slade, 2004. "Market Power and Joint Dominance in U.K. Brewing," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 133-163, March.
    • Handle: RePEc:bla:jindec:v:52:y:2004:i:1:p:133-163
    DOI: 10.1111/j.0022-1821.2004.00219.x
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    1. Slade, Margaret E, 1998. "Beer and the Tie: Did Divestiture of Brewer-Owned Public Houses Lead to Higher Beer Prices?," Economic Journal, Royal Economic Society, vol. 108(448), pages 565-602, May.
    2. Jith Jayaratne & Carl Shapiro, 2000. "Simulating Partial Asset Divestitures to 'Fix' Mergers," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 7(2), pages 179-200.
    3. Aviv Nevo, 2000. "Mergers with Differentiated Products: The Case of the Ready-to-Eat Cereal Industry," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 395-421, Autumn.
    4. Werden, Gregory J & Froeb, Luke M, 1994. "The Effects of Mergers in Differentiated Products Industries: Logit Demand and Merger Policy," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(2), pages 407-426, October.
    5. Joris Pinkse & Margaret E. Slade & Craig Brett, 2002. "Spatial Price Competition: A Semiparametric Approach," Econometrica, Econometric Society, vol. 70(3), pages 1111-1153, May.
    6. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
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