Proliferation of Brewers’ Brands and Price Uniformity in Canadian Beer Markets

Abstract

In this paper, we study retail pricing in Canadian beer markets, where access to the liquor distribution system and the retail price list is restricted by government ownership and control of the system. We consider alternative explanations for price uniformity in the differentiated beer products market. While an analysis of retail beer price data from six Canadian provinces for a 10-year period shows that no single explanation of price uniformity strongly dominates the others, some of the results are consistent with menu cost and demand uncertainty theories of price uniformity.