2012 MT#2

Part I: Collusive Behavior (30 minutes suggested)

Claim: “InBev and SABMiller-Coors act more like Bertrand than Cournot duopolists.”

Challenge: Don’t (primarily) argue true vs false. Rather, what theory might we look to,
beyond the basic Bertrand and Cournot cases? What data would these theories suggest we
need to examine to judge the merits of the claim?

In other words, what symptoms would we associate with Bertrand competition, which
might be indicative of Cournot? Again, focus first and foremost on conceptual issues, but
data to bring to bear in your conclusion. (Data include structural and not merely
performance metrics.)

Part II: Mergers (30 minutes suggested)

InBev and SABMiller-Coors both engaged in mergers, starting as small firms in Belgium
and South Africa, respectively, and through acquisitions building a global presence. How
should we make sense of these mergers?

Was their growth primarily due to one or more of the periodic US (and European) merger
waves? Did mergers enhance their market power? Did they use predatory tactics relative
to smaller brewers? Provide both a theoretical and an empirical perspective on the
evolution of the beer industry.

Part III: IDs (do all four; 30 minutes suggested)

Define the terms, but also make sure you indicate why these terms are significant for the
study of industrial organization, using appropriate examples.

1. limit pricing
2. fringe firms
3. overlapping markets
4. tacit collusion