Free Content Markets: Beer in Germany and the United States

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Abstract:

Between 1950 and 2000, the four-firm producer-concentration ratio for beer increased from 22 to 95 in the United States; and Anheuser-Busch's share of domestic output ballooned from 6 to 54 percent. In Germany, concentration has risen, but it remains low. In 2000, the four-firm producer-concentration ratio was just 29; and the eight-firm ratio in Germany was smaller than the one-firm ratio in the United States. In 2005, after five years of important mergers involving big brewers, the German beer industry was still much less concentrated than its American counterpart. In this article, I discuss several candidate explanations for the failure of beer-producer-concentration to rise as much in Germany as in the United States: the relevance of the new technologies to German brewers, the preferences of German consumers, the rules for advertising on German television and other factors, largely absent from the consensus interpretation of American experience. I find that market structure depends on a remarkably broad range of factors, extending well beyond technological opportunity and market size.

Document Type: Regular Paper

DOI: http://dx.doi.org/10.1257/089533006776526120

Publication date: December 1, 2006

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  • The Journal of Economic Perspectives (JEP) attempts to fill a gap between the general interest press and most other academic economics journals. The journal aims to publish articles that will serve several goals: to synthesize and integrate lessons learned from active lines of economic research; to provide economic analysis of public policy issues; to encourage cross-fertilization of ideas among the fields of thinking; to offer readers an accessible source for state-of-the-art economic thinking; to suggest directions for future research; to provide insights and readings for classroom use; and to address issues relating to the economics profession.
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