Today I saw this
gem in the NYtimes. Seeing as Anheuser-Busch InBev is a giant in
the domestic swill industry of the US and there are relatively few competitors
(Miller?... if any) this article is especially interesting to me because of the
beer and the econ, two things I often put together. Since Anheuser-Busch
seems to recently have been enjoying a collusive oligopoly with Coors and
Miller, does the threat of Mexico’s Grupo Modelo not joining in make this
a non-collusive oligopoly?
Then again, who cares about the
US beer market? As the article states, the number of small breweries popping up
is increasing, while market share for the giants is decreasing. Time to find
the untapped markets.
While I was living in Shanghai
I was somewhat amused that Budweiser had shelf space in many of the local
convenience stores. Now in Malaysia, Carlsberg is common and Asahi is present,
but not too much in the way of Anheuser-Busch. In the end I would love to
have other beers enter this market, but I am also concerned with the price of
my beer.
Would the merger
of Anheuser-Busch and Grupo Modelo actually create a monopoly or
would it just make them more competitive in the global market?
Carl Shapiro, the former chief economist at the Justice Department said "Markets work best, when everyone has to watch their back." I tend to agree.
Pradeep Kumar, my classmate at Penn State, has a paper about a similar question for banks. Is it good for consumers when banks merge? There are market power issues, but then I also like to see my bank branch (beer brand) wherever I go. Estimating a model that has both effects in it, Pradeep finds that mergers of banks generally increase consumer surplus. Here is his paper.
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