U.S. Brewing Industry Profitability: A Simultaneous Determination of Structure, Conduct, and Performance

The U.S. brewing industry plays an important role in the U.S. economy. Although the number of firms has increased in the industry, the industry overall has remained very concentrated, with a three-firm concentration ratio of 81% in 2000 (Stack 2000). Increasing concentration in the U.S brewing indus...

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Bibliographic Details
Published inJournal of agricultural & food industrial organization Vol. 11; no. 1; pp. 139 - 150
Main Authors Bhuyan, Sanjib, McCafferty, Michael
Format Journal Article
LanguageEnglish
Published De Gruyter 2013
Subjects
brewing industry
market power
markets
profitability
public policy
United States
Mexico
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Summary:The U.S. brewing industry plays an important role in the U.S. economy. Although the number of firms has increased in the industry, the industry overall has remained very concentrated, with a three-firm concentration ratio of 81% in 2000 (Stack 2000). Increasing concentration in the U.S brewing industry raises public policy concerns due to the potential impact of concentration on market performance and efficiency, for example, the recent decision by the U.S. Department of Justice (DOJ) to block the proposed merger between AB–InBev and Mexico’s Groupo Modelo. Employing an improved version of the structure-conduct-performance (SCP) approach, we examine the relationship between concentration and profitability in the U.S. brewing industry. Our results support the hypothesis that market concentration impacts market performance. We, however, did not address the issue of collusive conduct or market power explicitly.
Bibliography:http://dx.doi.org/10.1515/jafio-2013-0008
ISSN:1542-0485
1542-0485
DOI:10.1515/jafio-2013-0008