Beeronometrics: Identifying the effect of concentration level in market efficiency

Camilo Santa Cruz Camacho

camilo.santacruz@tu-dortmund.de

Abstract

Competition in markets has historically been recognized by economic literature as a crucial factor affecting various aspects of market performance, including product quality, levels of innovation, efficiency, and overall economic welfare. Given this, this study aims to determine whether increased competition in beer markets translates into higher efficiency in the market. Using pooled multiple regression analysis (POLS), as well as Fixed (FE) and Random Effects (RE) in a panel of 92 countries between 2011 and 2021, it is found evidence that lower levels of market concentration lead to higher efficiency in beer market. This evidence comes to support the proposition that more competition leads to a greater quantity produced and higher traded value and therefore greater consumer welfare, as suggested by industrial economics and competition policy theory. In a complementary way, the following research provides a methodological input that helps to demonstrate the effects that competition has on consumption levels in the markets. The study concludes with the main empirical and theoretical inferences drawn, as well as the unknowns and lines of the future that need to be addressed in future research.

Keywords

Beer Economics, Industrial Organization, Competition Policy, Monopoly, Panel Data, Microeconometrics, Consumer Welfare, Market Structure, Economics of Scale, Agriculture Economics, Market Efficiency

Cite: Santa Cruz - Camacho (2024). Beeronometrics: Identifying the effect of concentration level in market efficiency. Seminar of Beeronomics. Milan 2024.

Residuals in RE models

Residuals in RE models

Residuals in FE models

Residuals in FE models

Economics of scale: Relation of Production and Costs and Monopoly vs Competition

Demand and supply shifts

Heat map of Consumption of beer per inhabitant in 2019 (in liters)

Heat map of Price per liter in 2019

Heat map of Market concentration

Scatter plot