PRICE COMPETITION IN U.S. BREWING^*

Abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. This study utilizes a brand-level dataset that captures a uniq experiment, a 100% increase in the excise tax, to evaluate d pricing models in the U.S. beer industry. To assess the plaus different models, the increase in marginal cost resulting fro increase is exploited: observed prices in the post-increase p compared to the prices that should be observed under variou models. Three types of models are analyzed: Bertrand-Nash, l and collusion. Results indicate that extreme cases of collusi confidently ruled out while several models may explain th prices equally well.

The Incidence of Tobacco Taxation: Evidence from Geographic Micro-Level Data

“…Kenkel fi nds that alcohol taxes are more than fully shifted to consumers across multiple brands and types of alcohol, and that for some brands the amount of over-shifting is more than 400 percent of the tax. Rojas (2008) uses the 1991 increase in the federal excise tax on beer as a natural experiment to assess a variety of pricing models in the beer industry; his work implies that beer taxes are more than fully passed on to consumers by as much as 237 percent of the tax.…”

Tax Incidence When Quality Matters: Evidence from the Beer Market

“…13 Rojas (2008) tests different models of competition in the beer industry and finds that firm behavior is explained reasonably well by Bertrand-Nash.…”

“…First, in our estimation below we directly test whether within brand quality changed upwards in the post-increase period but fail to find evidence for such hypothesis. Second, in prior work (Rojas 2008) we construct a partial equilibrium model using data prior to the tax increase to simulate the equilibrium prices that would be observed under various modes of competition as a result of the tax increase; all these simulation exercises hold quality constant but almost always predict price overshifting. 18 Finally, had a quality upgrade been in place, we would expect to see a gradual and slow change in it, rather than the abrupt shift reflected in the graph.…”

“…19 To conserve space, we have excluded variables used in the demand estimation. Details of these variables and a further description of the database and the data selection procedure can be found in Rojas (2008). 20 IRI collects scanner data from a large sample of supermarkets across various areas in the U.S.…”

The Incidence of Tobacco Taxation: Evidence from Geographic Micro-Level Data

“…Kenkel finds that alcohol taxes are more than fully shifted to consumers across multiple brands and types of alcohol, for some brands the over-shifting is more than 400 percent of the tax. Rojas (2008) uses the 1991 increase in the federal excise tax on beer as a natural experiment to assess a variety of pricing models in the beer industry, his work implies that beer taxes are more than fully passed on to consumers by as much as 237 percent of the tax.…”