Market power estimation in the peruvian brewing industry

Abstract

Peruvian brewing industry provides an interesting case to study the process of concentration that has been running its course in the global brewing industry and thus, it offers an attractive scope for evaluating market power. Following the structure-conduct-performance approach, a nonlinear simultaneous equation model is estimated to measure the degree of market power and to analyse its shifts as the industry undergoes structural changes on a monthly basis (1995-2007). Results suggest that the brewing industry is imperfectly competitive and market’s structural changes are reflected in the market power parameter estimates.