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Post and Hold Regulation and Competitive Conduct: Evidence from the U.S. Beer Industry

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  • Gayle, Philip
  • Faheem, Adeel

Abstract

The literature argues that Post and Hold (PH) laws facilitate tacit collusive price-setting behavior among suppliers of alcoholic beverages. Yet there is no explicit empirical test of this claim. We specify and estimate a structural model designed to identify the extent to which PH laws induce tacit collusive price-setting behavior among beer suppliers. Our estimates reveal evidence of PH law-induced collusive behavior that causes higher prices and lower consumption. Furthermore, we find that an alcohol content tax as a replacement for PH regulation yields the highest surplus to consumers compared to a sales tax or the PH regulation.

Suggested Citation

  • Gayle, Philip & Faheem, Adeel, 2024. "Post and Hold Regulation and Competitive Conduct: Evidence from the U.S. Beer Industry," MPRA Paper 122541, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:122541
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    File URL: https://mpra.ub.uni-muenchen.de/122541/1/MPRA_paper_122541.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Post and Hold Regulation; Competitive Conduct; US Beer Industry; Externality; Corrective Tax Policy;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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