ORIGINAL ARTICLE
Hurdles to hops: How self-distribution laws affect craft brewery output
James M. Harrison,
Darrell J. Glaser,
Corresponding Author
James M. Harrison
Department of Economics, United States Naval Academy, Annapolis, Maryland, USA
Correspondence
James M. Harrison, Department of Economics, United States Naval Academy, Annapolis, MD, USA.
Email: [email protected]
Search for more papers by this authorDarrell J. Glaser
Department of Economics, United States Naval Academy, Annapolis, Maryland, USA
Search for more papers by this authorJames M. Harrison,
Darrell J. Glaser,
Corresponding Author
James M. Harrison
Department of Economics, United States Naval Academy, Annapolis, Maryland, USA
Correspondence
James M. Harrison, Department of Economics, United States Naval Academy, Annapolis, MD, USA.
Email: [email protected]
Search for more papers by this authorDarrell J. Glaser
Department of Economics, United States Naval Academy, Annapolis, Maryland, USA
Search for more papers by this authorFirst published: 24 August 2024
Abstract
We examine the impact of laws that allow breweries to bypass distributors. We construct a model of heterogeneous firms where some states require pairing with distributors who charge fixed and marginal costs in return for additional market share. The model predicts that states without such requirements have higher output and employment due to greater entry and firm-level production. To test this model, we exploit the adoption of self-distribution laws from 2008 to 2019. We find that states that do not require a distributor have higher brewery output and employment, and that this is primarily driven by a greater entry of breweries.
Open Research
DATA AVAILABILITY STATEMENT
Restrictions apply to the availability of these data, which were used under license for this study. Data are available from https://www.brewersassociation.org/statistics-and-data/brewery-production-data/ with the permission of the BA. Data without restrictions are available in openICPSR at https://doi.org/10.3886/E208165V1 reference number 208165.
Supporting Information
| Filename | Description |
|---|---|
| coep12668-sup-0001_DisclosureForms.pdf161.7 KB | Supporting Information S1 |
Please note: The publisher is not responsible for the content or functionality of any supporting information supplied by the authors. Any queries (other than missing content) should be directed to the corresponding author for the article.
REFERENCES
- Abel-Koch, J. (2013) Who uses intermediaries in international trade? Evidence from firm-level survey data. The World Economy, 36(8), 1041–1064. Available from: https://doi.org/10.1111/twec.12025
- Ahn, J.B., Khandelwal, A.K. & Wei, S.J. (2011) The role of intermediaries in facilitating trade. Journal of International Economics, 84(1), 73–85. Available from: https://doi.org/10.1016/j.jinteco.2010.12.003
- Akerman, A. (2018) A theory on the role of wholesalers in international trade based on economies of scope. Canadian Journal of Economics, 51(1), 156–185. Available from: https://doi.org/10.1111/caje.12319
- Arkhangelsky, D., Athey, S., Hirshberg, D.A., Imbens, G.W. & Wager, S. (2021) Synthetic difference-in-differences. The American Economic Review, 111(12), 4088–4118. Available from: https://doi.org/10.1257/aer.20190159
- Arkhangelsky, D. & Hirshberg, D. (2023) Large-Sample Properties of the Synthetic Control Method under Selection on Unobservables. arXiv Working Paper, 1–95.
- Bernard, A.B., Jensen, J.B., Redding, S.J. & Schott, P.K. (2010) Wholesalers and Retailers in US Trade. The American Economic Review, Papers and Proceedings, 100(2), 408–413. Available from: https://doi.org/10.1257/aer.100.2.408
- Blum, B.S., Claro, S. & Horstmann, I. (2010) Facts and figures on intermediated trade. American Economic Review, Papers and Proceedings, 100(2), 419–423. Available from: https://doi.org/10.1257/aer.100.2.419
- Borusyak, K., Jaravel, X. & Spiess, J. (2023) Revisiting Event Study Designs: Robust and Efficient Estimation. Review of Economic Studies, Forthcoming.
- Brester, G.W., M. Mccullough, J. Atwood, & C.G. Austin (2023). Beer Excise Taxes and the Craft Beverage and Modernization Tax Reform Act. Journal of Agricultural and Resource Economics 48(2), 342–360.
- Burgdorf, J. (2019) Impact of mandated exclusive territories in the US brewing industry: Evidence from scanner level data. International Journal of Industrial Organization, 63, 376–416. Available from: https://doi.org/10.1016/j.ijindorg.2018.12.001
- Burgdorf, J. (2021) Franchise Termination Laws, Craft Brewery Entry and Growth. SSRN Working Paper.
- Caetano, C. & Callaway, B. (2023) Difference-in-Differences with Time-Varying Covariates in the Parallel Trends Assumption. Working Paper, pp. 1–47.
- Callaway, B. & Sant’Anna, P.H. (2021) Difference-in-Differences with multiple time periods. Journal of Econometrics, 225(2), 200–230. Available from: https://doi.org/10.1016/j.jeconom.2020.12.001
- Carroll, G.R. & Swaminathan, A. (2000) Why the microbrewery movement? Organizational dynamics of resource partitioning in the US brewing industry. American Journal of Sociology, 106(3), 715–762. Available from: https://doi.org/10.1086/318962
- Clarke, D., Pailañir, D., Athey, S. & Imbens, G. (2023) Synthetic Difference-in-Differences Estimation. IZA Discussion Paper No. 15907.
- Connolly, C., Graziano, M., Mcdonnell, A. & Steinbach, S. (2023) In Cervisia Veritas: The impact of repealing Sunday blue laws on alcohol sales and retail competition. Journal of Wine Economics, 18(4), 312323. Available from: https://doi.org/10.1017/jwe.2023.26
- Crouch, A. (2017) The Pride of Belchertown. Beer Advocate, 123, pp. 53–66.
- Croxall, D.J. (2019) Helping Craft Beer Maintain and Grow Market Shares with Private Enforcement of Tied-House and False Advertising Laws. Gonzaga Law Review, 55.
- Crozet, M., Lalanne, G. & Poncet, S. (2013) Wholesalers in international trade. European Economic Review, 58, 1–17. Available from: https://doi.org/10.1016/j.euroecorev.2012.10.005
- de Chaisemartin, C. & D’Haultfouille, X. (2020) Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects. The American Economic Review, 110(9), 2964–2996. Available from: https://doi.org/10.1257/aer.20181169
- Dobis, E.A., Reid, N., Schmidt, C. & Goetz, S.J. (2019) The Role of Craft Breweries in Expanding (Local) Hop Production. Journal of Wine Economics, 14(4), 374–382. Available from: https://doi.org/10.1017/jwe.2019.17
- Eckert, F., Fort, T.C., Schott, P. & Yang, N. (2020) Imputing Missing Values in the US Census Bureau’s County Business Patterns. NBER Working Paper No. w26632.
- Elzinga, K.G., Tremblay, C.H. & Tremblay, V.J. (2015) Craft Beer in the United States: History, Numbers, and Geography. Journal of Wine Economics, 10(3), 242–274. Available from: https://doi.org/10.1017/jwe.2015.22
- Gohmann, S.F. (2016) Why Are There so Few Breweries in the South? Entrepreneurship: Theory and Practice, 40(5), 1071–1092. Available from: https://doi.org/10.1111/etap.12162
- Goodman-Bacon, A. (2021) Difference-in-differences with variation in treatment timing. Journal of Econometrics, 225(2), 254–277. Available from: https://doi.org/10.1016/j.jeconom.2021.03.014
- Harrison, J.M. & Glaser, D.J. (2024) COEP replication package for “Hurdles to hops: how self-distribution laws affect craft brewery output”. Ann Arbor: Inter-university Consortium for Political and Social Research [Distributor]. Available from: https://doi.org/10.3886/E208165V1
10.3886/E208165V1 Google Scholar
- Kerkvliet, J.R., Nebesky, W., Tremblay, C.H. & Tremblay, V.J. (1998) Efficiency and Technological Change in the U.S. Brewing Industry. Journal of Productivity Analysis, 10(3), 271–288. Available from: https://doi.org/10.1023/a:1018615305725
- Malone, T. & Lusk, J.L. (2016) Brewing up entrepreneurship: government intervention in beer. Journal of Entrepreneurship and Public Policy, 5(3), 325–342. Available from: https://doi.org/10.1108/jepp-02-2016-0004
- McCann, F. (2013) Indirect Exporters. Journal of Industry, Competition and Trade, 13(4), 519–535. Available from: https://doi.org/10.1007/s10842-012-0133-x
10.1007/s10842-012-0133-x Google Scholar
- McCullough, M., Berning, J. & Hanson, J.L. (2019) Learning by brewing: Homebrewing legalization and the brewing industry. Contemporary Economic Policy, 37(1), 25–39. Available from: https://doi.org/10.1111/coep.12394
- Melitz, M.J. (2003) Increasing returns, imperfect competition and the positive theory of international trade. Econometrica, 71(6), 1695–1725. Available from: https://doi.org/10.1111/1468-0262.00467
10.1111/1468-0262.00467 Google Scholar
- Melitz, M.J. & Redding, S.J. (2014) Heterogeneous Firms and Trade, Handbook of International Economics. Elsevier B.V, 4.
- Miller, S.R., Sirrine, J.R., McFarland, A., Howard, P.H. & Malone, T. (2019) Craft beer as a means of economic development: An economic impact analysis of the Michigan value chain. Beverages, 5(2), 35. Available from: https://doi.org/10.3390/beverages5020035
- Palardy, N., Costanigro, M., Cannon, J., Thilmany, D., Bayham, J., Callaway, J., et al. (2023) Beer sales in grocery and convenience stores: a glass half-full for craft brewers? Regional Studies, 57(10), 1981–1994. Available from: https://doi.org/10.1080/00343404.2023.2166914
10.1080/00343404.2023.2166914 Google Scholar
- Reid, N. (2021) Craft Beer Tourism: The Search for Authenticity, Diversity, and Great Beer. In M. Ferrante, O. Fritz & Öner (Eds.) Regional Science Perspectives on Tourism and Hospitality. Advances in Spatial Science.
10.1007/978-3-030-61274-0_16 Google Scholar
- Rojas, C. (2012) The Effect of Mandated Exclusive Territories in the US Brewing Industry. The B.E. Journal of Economic Analysis & Policy, 12(1). Available from: https://doi.org/10.1515/1935-1682.3088
- Roth, J., Sant’Anna, P.H., Bilinski, A. & Poe, J. (2023) What’s trending in difference-in-differences? A synthesis of the recent econometrics literature. Journal of Econometrics, 235(2), 2218–2244. Available from: https://doi.org/10.1016/j.jeconom.2023.03.008
- Sant’Anna, P.H. & Zhao, J. (2020) Doubly robust difference-in-differences estimators. Journal of Econometrics, 219(1), 101–122. Available from: https://doi.org/10.1016/j.jeconom.2020.06.003
- Sass, T.R. & Saurman, D.S. (1993) Mandated exclusive territories and economic efficiency: an empirical analysis of the malt-beverage industry. The Journal of Law & Economics, 36(1), 153–177. Available from: https://doi.org/10.1086/467269
- Sass, T.R. & Saurman, D.S. (1996) Efficiency effects of exclusive territories: Evidence from the Indiana Beer Market. Economic Inquiry, 34(3), 597–615. Available from: https://doi.org/10.1111/j.1465-7295.1996.tb01399.x
- Sun, L. & Abraham, S. (2021) Estimating dynamic treatment effects in event studies with heterogeneous treatment effects. Journal of Econometrics, 225(2), 175–199. Available from: https://doi.org/10.1016/j.jeconom.2020.09.006
- Tremblay, C.H. & Tremblay, V.J. (2005) The U.S. Brewing Industry: Data and Economic Analysis. Cambridge: MIT Press.
- Tremblay, V.J., Iwasaki, N. & Tremblay, H. (2005) The Dynamics of Industry Concentration for U.S. Micro and Macro Brewers. Review of Industrial Organization, 26(3), 307–324. Available from: https://doi.org/10.1007/s11151-004-8114-9
- Yandle, B. (1983) Bootleggers and Baptists-the education of a regulatory economists. AEI Journal of Government and Society, 7, 12–16.
- Yandle, B. (1999) Bootleggers and Baptists in retrospect. Regulation, 22, 5–7.
