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Munich Personal RePEc Archive

Post and Hold Regulation and Competitive Conduct: Evidence from the U.S. Beer Industry

Gayle, Philip and Faheem, Adeel (2024): Post and Hold Regulation and Competitive Conduct: Evidence from the U.S. Beer Industry. Forthcoming in: International Journal of Industrial Organization

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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.

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