1. Global giants and local stars: How changes in brand ownership affect competition
- Author
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Alviarez, Vanessa, Head, Keith, Mayer, Thierry, Sauder School of Business [British Columbia] (Sauder), University of British Columbia (UBC), Département d'économie (Sciences Po) (ECON), and Sciences Po (Sciences Po)-Centre National de la Recherche Scientifique (CNRS)
- Subjects
[SHS.ECO]Humanities and Social Sciences/Economics and Finance - Abstract
We assess the consequences for consumers in 76 countries of multinational acquisitions in beer and spirits. Outcomes depend on how changes in ownership affect markups versus efficiency. We find that owner fixed effects contribute very little to the performance of brands. On average, foreign ownership tends to raise costs and lower appeal. Using the estimated model, we simulate the consequences of counterfactual national merger regulation. The US beer price index would have been 4–7% higher without divestitures. Up to 30% savings could have been obtained in Latin America by emulating the pro-competition policies of the US and EU.
- Published
- 2020