Efficiencies brewed : pricing and consolidation in the U.S. beer industry

Author / Creator

Ashenfelter, Orley, 1942-

Available as

Online

Summary

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 p...

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.

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