Regulating Alcoholic Beverages

Using discrete choice demand estimation with random coefficients, Eugenio J. Miravete has studied the pricing strategies of a regulated monopolist in charge of the distribution and retail sales of alcoholic beverages in Pennsylvania. His particular focus is to integrate the pricing of this retail monopolist with the pricing strategies of upstream liquor distillers. The issue is of importance because this industry is frequently the target of heavy taxation and aggressive pricing in order to limit the negative externalities of drinking. However, regulation on what and how pricing of alcoholic beverages should be implemented in the retail sector allows distillers to essentially capture most of the rents of this industry and render regulation of the monopolist ineffective.

While at CESIfo, Mr Miravete will present his analysis of the fast diffusion of the diesel engine in the European automobile industry during the 1990s, documenting how quickly the innovation rents were dissipated because of the effect of competition (although the Volkswagen group is still able to capture a substantial share). He will also explain that the differing diffusion of this technology in Europe and the US is due to very different environmental regulation rather than to fuel price or taxation.

At CESifo he will also collaborate with other researchers on the possibilities that some German data collected by the Institute may be useful in studying models of innovation of technology, in particular to address issues of market structure and the importance of complementarities in coordinating innovative strategies.

Eugenio J. Miravete is Rex G Baker Jr. Professor of Political Economy, University of Texas at Austin as well as Research Fellow at the Center for Economic Policy Research. He previously taught at the University of Pennsylvania and at New York University. He received his PhD from Northwestern University in 1996. His editorships include BE-Press Review of Network Economics (Editor, 2009–), Information Economics and Policy (Associate Editor, 2004–2010), Journal of the European Economic Association (Associate Editor, 2005–2010), International Journal of Industrial Organization (Associate Editor, 2005–2014) and the Journal of Economic Behavior and Organization (Associate Editor, 2012–).