Tuesday, March 5, 2013

Beer Consolidation

According to Adam Davidson's NY Times blog entry, the DOJ is using modern tools of managerial economics when seeking to block Anheuser-Busch InBev from buying the rest of Grupo Modelo. AB InBev was formed by a recent merger and Corona's 7% US market share goes to Grupo Modelo.
The case is not built on any leaked documents about some secret plan to abuse market power and raise prices. Instead, it’s based on the work of Justice Department economists who, using game theory and complex forecasting models, are able to predict what an even bigger AB InBev will do.

At the same time, entry has been common,
In 1978, there were 89 breweries in the United States; at the beginning of this year, there were 2,336.

But almost all of these entrants are tiny and their products are quite differentiated from the big guys'.

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