BEER AND THE TIE - DID DIVESTITURE OF BREWER-OWNED PUBLIC HOUSES LEADTO HIGHER BEER PRICES

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