COOPERATION IN PRICES AND CAPACITIES - TRADE ASSOCIATIONS IN BREWING AFTER REPEAL

This study's main contribution is examination of the excess capacity h eld by brewers during a period in which they tacitly cooperated on pri ce. The analysis covers the industry in the United States between repe al of Prohibition in 1933 and wartime rationing of raw materials in 19 42. From April 1933 to May 1935, ''destructive price-cutting'' among b rewers was illegal under the National Industrial Recovery Act. Subsequ ent rivalry among trade associations facilitated the development of ta citly cooperative pricing arrangements. The trade associations appear to have adopted a different agenda as cooperation spread among all bre wers. Instead of just facilitating cooperation on price, the associati ons may have facilitated cooperation in the distribution of responsibi lity for enforcement. Members apparently distributed responsibility by coordinating the allocation of excess capacity. These and other resul ts are interpreted to suggest additional avenues for research on the d istribution of responsibility for punishments in a cooperative regime.