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Efficiencies Brewed: Pricing and Consolidation in the US Beer Industry

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Listed:
  • Orley C. Ashenfelter

    (Princeton University)

  • Daniel Hosken

    (Federal Trade Commission)

  • Matthew C. 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.

Suggested Citation

  • Orley C. Ashenfelter & Daniel Hosken & Matthew C. Weinberg, 2013. "Efficiencies Brewed: Pricing and Consolidation in the US Beer Industry," Working Papers 2013-1, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2013-1
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    References listed on IDEAS

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    More about this item

    Keywords

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

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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