Tuesday, March 05, 2013

Public choice and anti-trust

I was critical of the Justice Department's worry over a possible beer duopoly in this recent post. The NY Times', Adam Davidson is way ahead of me in this story from last Sunday. Here are his numbers:
Every day, the Web site BeerPulse tries to list every single new beer available in the United States. And that’s harder than you might imagine. Recently, the site posted Cigar City’s Jamonera Belgian-style Porter, Odell Tree Shaker Imperial Peach IPA, as well as a rye lager, a cherry blossom lager and a barley wine. And the list goes on, and on. In 1978, there were 89 breweries in the United States; at the beginning of this year, there were 2,336, with an average of one new brewery per day. Most of them are tiny, but a handful, like Sam Adams and Sierra Nevada, have become large national brands. At the same time, sales of Budweiser in the United States have dropped for 25 consecutive years.
But we have to be careful. Luigi Zingales, in his very enjoyable Capitalism for the People, makes a public choice argument in favor of anti-trust.  It is part of his attack on crony capitalism.  He writes, "Yet the most powerful argument in favor of anti-trust law is one that is rarely made: anti-trust law reduces the political power of firms" (p. 38).  The big merged units more easily have their way in Washington, DC.

This is surely not the motivation of the Department of Justice, but it is also worth thinking about.