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Efficiency Effects of Exclusive Territories: Evidence from the Indiana Beer Market

Author

Listed:
  • Sass, Tim R
  • Saurman, David S

Abstract

The welfare effects of vertically imposed exclusive territories and the appropriate antitrust policy toward them have long been debated. This paper sheds light on the exclusive-territory controversy by examining the effects of Indiana's 1979 ban on the grant of exclusive territories to beer wholesalers. Using time-series data for 1948-90, the authors find the ban reduced beer consumption in Indiana by 6 percent. Coupled with previous evidence that Indiana's ban reduced price, their results suggest that exclusive territories in the beer industry increase demand and enhance welfare by stimulating the provision of dealer services. Copyright 1996 by Oxford University Press.

Suggested Citation

  • Sass, Tim R & Saurman, David S, 1996. "Efficiency Effects of Exclusive Territories: Evidence from the Indiana Beer Market," Economic Inquiry, Western Economic Association International, vol. 34(3), pages 597-615, July.
    • Handle: RePEc:oup:ecinqu:v:34:y:1996:i:3:p:597-615
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    Citations

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    Cited by:

    1. Bakó, Barna & Kálecz-Simon, András, 2012. "Vertikális korlátozások - növelik vagy csökkentik a jólétet?. Érvek az irodalomból [Vertical constraints - do they increase or reduce welfare?. Arguments in the literature]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1138-1159.
    2. Xiao, Junji & Ju, Heng, 2016. "The determinants of dealership structure: Empirical analysis of the Chinese auto market," Journal of Comparative Economics, Elsevier, vol. 44(4), pages 961-981.
    3. Salvatore Piccolo & Markus Reisinger, 2011. "Exclusive Territories and Manufacturers' Collusion," Management Science, INFORMS, vol. 57(7), pages 1250-1266, July.
    4. Suzuki, Ayako, 2009. "Market foreclosure and vertical merger: A case study of the vertical merger between Turner Broadcasting and Time Warner," International Journal of Industrial Organization, Elsevier, vol. 27(4), pages 532-543, July.
    5. Chia-Wen Chen & Shiou Shieh, 2016. "Does Exclusive Dealing Matter? Evidence from Distribution Contract Changes in The U.S. Beer Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 64(3), pages 411-435, September.
    6. William James Adams, 2006. "Markets: Beer in Germany and the United States," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 189-205, Winter.
    7. Jerry Ellig & Alan E. Wiseman, 2013. "Price Effects and the Commerce Clause: The Case of State Wine Shipping Laws," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 10(2), pages 196-229, June.
    8. Rojas Christian, 2012. "The Effect of Mandated Exclusive Territories in the US Brewing Industry," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-41, May.
    9. Cooper, James C. & Wright, Joshua D., 2012. "Alcohol, antitrust, and the 21st Amendment: An empirical examination of post and hold laws," International Review of Law and Economics, Elsevier, vol. 32(4), pages 379-392.
    10. Burgdorf, Jacob, 2019. "Impact of mandated exclusive territories in the US brewing industry: Evidence from scanner level data," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 376-416.
    11. John Asker, 2004. "Diagnosing Foreclosure Due to Exclusive Dealing," Working Papers 04-36, New York University, Leonard N. Stern School of Business, Department of Economics.
    12. John Asker, 2016. "Diagnosing Foreclosure due to Exclusive Dealing," Journal of Industrial Economics, Wiley Blackwell, vol. 64(3), pages 375-410, September.
    13. Jerry Ellig & Alan E. Wiseman, 2004. "Interstate Trade Barriers and Potential Regulatory Competition : The Case of Virginia's Direct Wine Shipping Ban," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 19(Spring 20), pages 26-42.
    14. Cooper, James C. & Froeb, Luke M. & O'Brien, Dan & Vita, Michael G., 2005. "Vertical antitrust policy as a problem of inference," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 639-664, September.

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