Hurdles to hops: How self‐distribution laws affect craft brewery output

Abstract

AbstractWe examine the impact of laws that allow breweries to bypass distributors. We construct a model of heterogeneous firms where some states require pairing with distributors who charge fixed and marginal costs in return for additional market share. The model predicts that states without such requirements have higher output and employment due to greater entry and firm‐level production. To test this model, we exploit the adoption of self‐distribution laws from 2008 to 2019. We find that states that do not require a distributor have higher brewery output and employment, and that this is primarily driven by a greater entry of breweries.