Brewing Wars of Attrition for Profit (and Concentration)

Brewing Wars of Attrition for Profit (and Concentration) Although research on industry structure, conduct, and performance has been important there are concerns that empirical applications inappropriately pool data from different industries and ignore the contributions of game theory. We avoid these concerns by investigating a single industry, U.S. brewing, in a simultaneous system derived from a game theoretic model. In spite of rising concentration in brewing, profits remained low because of a continuing war of attrition. We develop a measure of the likelihood of “war” and find that the type of game being played, as well as structure and conduct variables, is an important determinant of industry performance. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Brewing Wars of Attrition for Profit (and Concentration)

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Publisher
Springer US
Copyright
Copyright © 2008 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-008-9189-5
Publisher site
See Article on Publisher Site

Abstract

Although research on industry structure, conduct, and performance has been important there are concerns that empirical applications inappropriately pool data from different industries and ignore the contributions of game theory. We avoid these concerns by investigating a single industry, U.S. brewing, in a simultaneous system derived from a game theoretic model. In spite of rising concentration in brewing, profits remained low because of a continuing war of attrition. We develop a measure of the likelihood of “war” and find that the type of game being played, as well as structure and conduct variables, is an important determinant of industry performance.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 19, 2008

References

  • Markets: Beer in Germany and the United States
    Adams, W.J.
  • The generalized war of attrition
    Bulow, J.; Klemperer, P.
  • Advertising dynamics and competitive advantage
    Doraszelski, U.; Markovich, S.
  • The dynamics of market structure
    Geroski, P.A.; Masson, R.T.; Shaanan, J.
  • Dynamic gains and static losses in oligopoly: Evidence from the beer industry
    Gisser, M.

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