Undergraduate Honors Theses

Thesis Defended

Spring 2013

Document Type

Thesis

Department

Economics

First Advisor

Dr. Scott J. Savage

Abstract

This study examines product differentiation and market structure in the U.S. brewpub industry. Brewery restaurants are characterized by whether they are singleestablishment or multiple-establishment restaurants. In particular, I investigate how entry behaviors of firms are affected by the existence of opposite type of brewpub in a market. I use data from oligopoly brewpub markets across the United States during 2002 and 2011. The analysis uses a cross sectional data in a discrete dependent variable econometric model to predict the profitability of a market. The results indicate that the existence of one opposite type of firm in a market makes a market unattractive for a new firm, and these effects are diminished when there are two or three opposite of firms present in a market. Finally, the effects of demand characteristics, such as population size, can be large enough to outweigh the effects of differentiation between firms.

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