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Does Exclusive Dealing Matter? Evidence from Distribution Contract Changes in The U.S. Beer Industry
Author(s) -
Chen ChiaWen,
Shieh Shiou
Publication year - 2016
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/joie.12108
Subject(s) - market share , distribution (mathematics) , panel data , business , carry (investment) , distributor , empirical evidence , industrial organization , marketing , commerce , economics , econometrics , mathematics , finance , mechanical engineering , mathematical analysis , philosophy , epistemology , engineering
We examine whether restricting a beer distributor's external trading opportunities increases the market shares of brands carried by the distributor. We use distribution status changes from the Anheuser‐Busch‐InBev distribution agreement, along with a panel scanner data set from a grocery chain in California, to implement a ‘difference‐in‐differences’ empirical strategy. We find that InBev's market share increased by 6% once InBev was carried by Anheuser‐Busch's exclusive distributors, while InBev's retail price had no significant change. The effect on InBev's market share is stronger for smaller stores that carry more brands. These results are consistent with the efficiency‐based theory of exclusive dealing.