Post and hold regulation and competitive conduct: Evidence from the U.S. beer industry

Philip G. Gayle and Adeel Faheem

International Journal of Industrial Organization, 2024, vol. 97, issue C

Abstract: The literature argues that Post and Hold (pH) laws facilitate tacit collusive price-setting behavior among suppliers of alcoholic beverages. Yet there is no explicit empirical test of this claim. We specify and estimate a structural model designed to identify the extent to which pH laws induce tacit collusive price-setting behavior among beer suppliers. Our estimates reveal evidence of pH law-induced collusive behavior that causes higher prices and lower consumption. Furthermore, we find that an alcohol content tax as a replacement for pH regulation yields the highest surplus to consumers compared to a sales tax or the pH regulation.

Keywords: Post and hold regulation; Competitive conduct; U.S. beer industry; Externality; Corrective tax policy (search for similar items in EconPapers)
JEL-codes: H21 H23 I18 K00 L13 L40 L66 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:97:y:2024:i:c:s0167718724000717

DOI: 10.1016/j.ijindorg.2024.103116

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