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Home Bias in U.S. Beer Consumption

Author

Listed:
  • Lopez, Rigoberto
  • Matschke, Xenia
Abstract
We apply the Berry, Levinsohn, and Pakes (1995) market equilibrium model to data from 30 brands of beers sold in 12 U.S. cities over 20 quarters (1988-92) to estimate the consumers’ taste for beer characteristics (price, alcohol content, and calories) as well as for the cultural region of origin (USA, Anglo-European, Germanic, and countries bordering the U.S.). Consumer heterogeneity is allowed with respect to age and income. Overall we end up with 7,200 beer brand observations (30x12x20) and 13,920 (58 random draws x 12 x 20) consumer observations. Empirical results indicate that indeed there is home bias with respect to foreign beers. Home bias is less accentuated among older and more affluent individuals.

Suggested Citation

  • Lopez, Rigoberto & Matschke, Xenia, 2011. "Home Bias in U.S. Beer Consumption," Working Paper series 148292, University of Connecticut, Charles J. Zwick Center for Food and Resource Policy.
    • Handle: RePEc:ags:ucozwp:148292
    DOI: 10.22004/ag.econ.148292
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    References listed on IDEAS

    as
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    2. Keith Head & John Ries, 2001. "Increasing Returns versus National Product Differentiation as an Explanation for the Pattern of U.S.-Canada Trade," American Economic Review, American Economic Association, vol. 91(4), pages 858-876, September.
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    5. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
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    9. Friberg, Richard & Paterson, Robert W. & Richardson, Andrew D., 2011. "Why is there a Home Bias? A Case Study of Wine," Journal of Wine Economics, Cambridge University Press, vol. 6(1), pages 37-66, January.
    10. Russell Hillberry & David Hummels, 2002. "Explaining Home Bias in Consumption: The Role of Intermediate Input Trade," NBER Working Papers 9020, National Bureau of Economic Research, Inc.
    11. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-1046, December.
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    Cited by:

    1. Meyerding, Stephan G.H. & Bauchrowitz, Alexander & Lehberger, Mira, 2019. "Consumer preferences for beer attributes in Germany: A conjoint and latent class approach," Journal of Retailing and Consumer Services, Elsevier, vol. 47(C), pages 229-240.
    2. Olivier BARGAIN & Jean-Marie CARDEBAT & Raphaël CHIAPPINI, 2020. "Trade Uncorked: Genetic Resistance and Quality Heterogeneity in Wine Exports," Bordeaux Economics Working Papers 2020-18, Bordeaux School of Economics (BSE).
    3. Mian Dai & Qiang Gong & Shiyu Tan, 2021. "Home bias and market power: Evidence from the Chinese automobile industry," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(3), pages 986-1017, November.
    4. Rachel A. Smith & C. Nicholas McKinney & Steven B. Caudill & Franklin G. Mixon, 2016. "Consumer ratings and the pricing of experience goods: hedonic regression analysis of beer prices," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-10, December.
    5. Jan Zavodny Pospisil & Lucie Sara Zavodna & Matej Jiranek, 2020. "Does the Packaging Change the Perceived Taste of Beer? Results from a Beer Experiment," Tržište/Market, Faculty of Economics and Business, University of Zagreb, vol. 32(1), pages 65-78.
    6. Olper, Alessandro & Curzi, Daniele & Frisio, Dario Gianfranco & Raimondi, Valentina, 2012. "Home Bias in Consumption: A Comparison between Wine and Beer," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(4).

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    More about this item

    Keywords

    Demand and Price Analysis;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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