Beer Snobs Do Exist: Estimation of Beer Demand by Type
By: Toro-Gonzalez, Daniel; McCluskey, Jill J.; Mittelhammer, Ron
Toro-Gonzalez, Daniel; McCluskey, Jill J.; Mittelhammer, Ron, Beer Snobs Do Exist: Estimation of Beer Demand by Type, Journal of Agricultural and Resource Economics, Volume 39, Issue 2, August 2014, Pages 174-187
Although mass-produced beers still represent the vast majority of U.S. beer sales, there has been a significant growth trend in the craft beer segment. This study analyzes the demand for beer as a differentiated product and estimates own-price, cross-price, and income elasticities for beer by type: craft beer, mass-produced beer, and imported beer. We verify that beer is a normal good with a considerably inelastic demand and also find that the cross-price elasticity across types of beer is close to zero. The results suggest that there are effectively separate markets for beer by type.