We examine the extent of market power in the brewing market of Perú, where the absence of preventive merger review eased consolidation into a single industrial brewer. We use a standard oligopoly model and exploit both seasonality in demand and atypically large and frequent variations in the structure and level of excise taxes to identify variations in market power. Our results provide evidence of the ineffectiveness of competition policy as uncontested mergers resulted in a degree of market power that decreased only with the entry of new firms.
Bibliographical noteFunding Information:
Ariel A. Casarin: Financial support from IDRC-Canada Grant 107206-001 is gratefully acknowledged. We thank three anonymous reviewers and in particular the editor for his valuable suggestions and guidance in improving our paper. All errors are ours.
© 2019, Springer Science+Business Media, LLC, part of Springer Nature.
- Brewing industry
- Market power
- Merger review