Cooperation in Prices and Capacities: Trade Associations in Brewing after Repeal

A M McGahan

Journal of Law and Economics, 1995, vol. 38, issue 2, 521-59

Abstract: This study's main contribution is examination of the excess capacity held by brewers during a period in which they tacitly cooperated on price. The analysis covers the industry in the United States between repeal of Prohibition in 1933 and wartime rationing of raw material in 1942. From April 1933 to May 1935, "destructive price-cutting" among brewers was illegal under the National Industrial Recovery Act. Subsequent rivalry among trade associations facilitated the development of tacitly cooperative pricing arrangements. The trade associations appear to have adopted a different agenda as cooperation spread among all brewers. Instead of just facilitating cooperation on price, the associations may have facilitated cooperation in the distribution of responsibility for enforcement. Members apparently distributed responsibility by coordinating the allocation of excess capacity. These and other results are interpreted to suggest additional avenues for research on the distribution of responsibility for punishments in a cooperative regime. Copyright 1995 by the University of Chicago.

Date: 1995
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Persistent link: https://EconPapers.repec.org/RePEc:ucp:jlawec:v:38:y:1995:i:2:p:521-59

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