Home Bias in US Beer Consumption

Abstract

We apply the Berry, Levinsohn and Pakes market equilibrium model to data from 30 brands of beer sold in 12 US cities over 20 quarters (1988-1992) to estimate consumers' preference for beer characteristics as well as for their cultural regions of origin. Consumer heterogeneity is accounted for with respect to age and income. Overall, our data is comprised of 7200 beer brand observations and 13920 hypothetical consumer observations. Empirical results indicate that there is, indeed, home bias with respect to foreign beers, although it varies with consumer age and income. © 2012 Wiley Publishing Asia Pty Ltd.