The demand for beer in presence of past consumption and advertising in the Czech Republic

Concetta Castiglione, Ladislava Grochová, Davide Infante and Janna Smirnova
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Concetta Castiglione: Department of Economics, Trinity College Dublin, Dublin, Ireland
Ladislava Grochová: Department of Economics, Faculty of Business and Economics, Mendel University in Brno, Brno, Czech Republic
Davide Infante: Department of Economics and Statistics, University of Calabria, Cosenza, Italy
Janna Smirnova: Department of Economics and Statistics, University of Calabria, Cosenza, Italy

Agricultural Economics, 2011, vol. 57, issue 12, 589-599

Abstract: The paper focuses on beer consumption in the Czech Republic, the country with the highest beer consumption per capita in the world. To understand the recent beer-consumption behaviour, we use the monthly data from a three year period, 2006-2008, to estimate both the 2SLS and the SUR model charting the demand for beer extended to the past consumption and advertising expenditure. The demand for beer in the Czech Republic reacts more strongly to the changes in price than it does to the investments in advertising. The results suggest two implications for the policy-makers. Consumption is as sensitive to the price of beer and its alternatives as it is to advertising, so taxes or restrictions on advertising can affect the consumption of beer, considering the long tradition of Czech consumers in drinking beer as the strong role of the past consumption demonstrates.

Keywords: beer demand; alcoholic beverages; 2SLS; SUR; Czech Republic (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:caa:jnlage:v:57:y:2011:i:12:id:103-2010-agricecon

DOI: 10.17221/103/2010-AGRICECON

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