Impact of Mandated Exclusive Territories in the US Brewing Industry: Evidence from Scanner Level Data

46 Pages Posted: 8 Jun 2019

See all articles by Jacob Burgdorf

Jacob Burgdorf

affiliation not provided to SSRN

Date Written: 2019

Abstract

I examine the competitive effects of mandated exclusive territories in the US beer industry. Theory is ambiguous as to the competitive impacts of this vertical practice. Using scanner data from a large number of grocery stores, I empirically examine the impact on beer prices, quantities, and number of brands sold after Wisconsin mandated that brewers must assign exclusive wholesale territories in 2006. Reduced form results from a differences-in-differences model using several control groups and a synthetic control show that the mandates increased prices and reduced quantity of craft beer. Overall number of brands sold decreased as well and craft brewers were the most negatively impacted. Findings suggest that the mandate gave protection to wholesalers and caused an increase in the costs of distribution and reduced competition in the brewing industry.

Keywords: Vertical relations, exclusive territories, regulation, brewing industry

JEL Classification: L42, L51, L66

Suggested Citation

Burgdorf, Jacob, Impact of Mandated Exclusive Territories in the US Brewing Industry: Evidence from Scanner Level Data (2019). Burgdorf, Jacob. "Impact of mandated exclusive territories in the US brewing industry: Evidence from scanner level data." International Journal of Industrial Organization 63 (2019): 376-416., Available at SSRN: https://ssrn.com/abstract=3392383

Jacob Burgdorf (Contact Author)

affiliation not provided to SSRN

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
20
Abstract Views
191
PlumX Metrics