UNDERSTANDING THE PRICE EFFECTS OF THE MILLERCOORS JOINT VENTURE

We document abrupt increases in retail beer prices just after the consummation of the MillerCoors joint venture, both for MillerCoors and its major competitor, Anheuser-Busch. Within the context of a differentiated-products pricing model, we test and reject the hypothesis that the price increases ca...

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Bibliographic Details
Published in:Econometrica 2017-11, Vol.85 (6), p.1763-1791
Main Authors: Miller, Nathan H., Weinberg, Matthew C.
Format: Article
Language:English
Subjects:
antitrust policy
Breweries
brewing industry
coordinated effects
Coordination
Documentary evidence
Joint ventures
Market power
merger enforcement
mergers
Prices
unilateral effects
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Summary:We document abrupt increases in retail beer prices just after the consummation of the MillerCoors joint venture, both for MillerCoors and its major competitor, Anheuser-Busch. Within the context of a differentiated-products pricing model, we test and reject the hypothesis that the price increases can be explained by movement from one Nash-Bertrand equilibrium to another. Counterfactual simulations imply that prices after the joint venture are 6%-8% higher than they would have been with Nash-Bertrand competition, and that markups are 17%-18% higher. We relate the results to documentary evidence that the joint venture may have facilitated price coordination.
ISSN:0012-9682
1468-0262
DOI:10.3982/ecta13333