Beer and the Tie: Did Divestiture of Brewer-owned Public Houses Lead to Higher Beer Prices?



In 1989, the United Kingdom Monopolies and Mergers Commission (MMC) recommended measures that eventually led brewers to divest themselves of 14,000 public houses. The MMC claimed that their recommendations would lower retail prices and increase consumer choice. Since that time, however, retail prices have risen. This paper contains an econometric analysis of the transition period. The analysis is based on a model of the relationship between retail price and retail-organisational form that emphasises how exclusive-dealing clauses and strategic factors interact