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Efficiency and Technological Change in the U.S. Brewing Industry

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  • Joe Kerkvliet
  • William Nebesky
  • Carol Tremblay
  • Victor Tremblay

Abstract

This study demonstrates that the measurement of technological change and economic efficiency are tightly linked. Efficiency measures may depend on carefully controlling for technological change, while tests of technological change may be sensitive to empirical model specifications. Moreover, the study underlines Solow's (1994) and Romer's (1994) admonition that econometricians should pay attention to industry and institutional evidence in building models of technological change. The empirical results presented here suggest that there has been substantial technological change in the U.S. brewing industry from 1950 to 1992. This occurred in the form of a dramatic shift in technology beginning with the introduction of super breweries in about 1972. There has also been a substantial increase in scale economies, which undoubtedly caused many inefficiently small firms to exit the industry during the 1960s and 1970s. Further results suggest that a more complete specification of technological change and the stochastic nature of the frontier production function leads to higher and more tenable estimates of efficiency. Copyright Kluwer Academic Publishers 1998

Suggested Citation

  • Joe Kerkvliet & William Nebesky & Carol Tremblay & Victor Tremblay, 1998. "Efficiency and Technological Change in the U.S. Brewing Industry," Journal of Productivity Analysis, Springer, vol. 10(3), pages 271-288, November.
    • Handle: RePEc:kap:jproda:v:10:y:1998:i:3:p:271-288
    DOI: 10.1023/A:1018615305725
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    References listed on IDEAS

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    1. Forsund, Finn R. & Lovell, C. A. Knox & Schmidt, Peter, 1980. "A survey of frontier production functions and of their relationship to efficiency measurement," Journal of Econometrics, Elsevier, vol. 13(1), pages 5-25, May.
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    Cited by:

    1. Fare, Rolf & Grosskopf, Shawna & Seldon, Barry J. & Tremblay, Victor J., 2004. "Advertising efficiency and the choice of media mix: a case of beer," International Journal of Industrial Organization, Elsevier, vol. 22(4), pages 503-522, April.
    2. Yin Xia & Steven Buccola, 2003. "Factor Use and Productivity Change in the Alcoholic Beverage Industries," Southern Economic Journal, John Wiley & Sons, vol. 70(1), pages 93-109, July.
    3. Parmeter, Christopher F., 2021. "Is it MOLS or COLS?," Efficiency Series Papers 2021/04, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    4. Loyland, Knut & Ringstad, Vidar, 2000. "Gains and structural effects of exploiting scale-economies in Norwegian dairy production," Agricultural Economics, Blackwell, vol. 24(2), pages 149-166, January.
    5. Barry Ness, 2018. "Beyond the Pale (Ale): An Exploration of the Sustainability Priorities and Innovative Measures in the Craft Beer Sector," Sustainability, MDPI, vol. 10(11), pages 1-12, November.

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