When Helping the Small Hurts the Middle: Beer Excise Duties and Market Concentration

University of Salzburg Economics and Finance Working Paper No. 2014-05

25 Pages Posted: 19 Oct 2014

See all articles by Simon Loretz

Simon Loretz

University of Bayreuth; Oxford University Centre for Business Taxation; University of Innsbruck

Harald Oberhofer

Vienna University of Economics and Business - Department of Economics; Austrian Institute of Economic Research (WIFO)

Date Written: October 18, 2014

Abstract

The beer market has undergone a dramatic change over the last decades and there are growing concerns of too much market concentration. Among other reasons we identify the role of beer excise taxes in the determination of the market structure. In particular the introduction of a minimum excise tax for beer in the European Union with the provision for a asymmetric reduction for small breweries can create incentives for small breweries. While we find evidence that high beer excise taxes increase the likelihood to be target of an international takeover, the overall role of beer taxes on the market structure is ambiguous. While the reduced beer excise for small breweries fosters new entries, they potentially squeeze out mid-sized breweries resulting in an even more concentration market.

Keywords: Market concentration, Beer excise duties, beer market, mergers and acquisitions

JEL Classification: G34, H25, L11, L22

Suggested Citation

Loretz, Simon and Oberhofer, Harald, When Helping the Small Hurts the Middle: Beer Excise Duties and Market Concentration (October 18, 2014). University of Salzburg Economics and Finance Working Paper No. 2014-05, Available at SSRN: https://ssrn.com/abstract=2511618 or http://dx.doi.org/10.2139/ssrn.2511618

Simon Loretz

University of Bayreuth ( email )

Universit├Ątsstra├če 30
Bayreuth, 95447
Germany

Oxford University Centre for Business Taxation ( email )

Park End Street
Oxford, Oxfordshire OX1 1HP
United Kingdom

University of Innsbruck ( email )

Innsbruck, A-6020
Austria

Harald Oberhofer (Contact Author)

Vienna University of Economics and Business - Department of Economics ( email )

Welthandelsplatz 1
A-1020 Vienna
Austria

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

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