Table of Contents

The Global Brewery Industry

The Global Brewery Industry

Markets, Strategies, and Rivalries

New Horizons in International Business series

Edited by Jens Gammelgaard and Christoph Dörrenbächer

This unique book explores some of the key topics of international business through the context of a global industry, focusing on the challenges brewery companies face as they operate in globalized markets. It examines the strategies of individual firms to develop markets and explores new insights into recent company rivalries, both globally and locally. In addition, it offers detailed analysis of some of the major players in the industry through longitudinal studies.

Chapter 4: Market integration and transportation: beer in Lao PDR

Magnus Andersson and Ari Kokko

Subjects: business and management, international business


To study the process of domestic market integration in Lao People’s Democratic Republic (hereafter Lao PDR), this chapter explores the spatial variation in beer prices and its relationship with transport costs and various local market characteristics. More specifically, we study how the price of a 640 ml bottle of Beer Lao varies across the country. In a well-integrated market, we expect the law of one price to hold. Controlling for transaction costs, a homogeneous product should have the same price throughout the market. Sellers trying to charge a higher price will find that potential buyers turn to competing suppliers. Those starting out with a lower price will meet high demand and realize that they can maximize their profit by raising their price. Well-integrated markets where price signals are rapidly transmitted across space are more efficient, since both consumers and producers are better able to adjust to changes in supply and demand conditions. In reality, however, markets are not perfectly integrated. Natural or man-made obstacles to economic interaction, such as lack of transport routes, excessive transport costs, or formal trade barriers, may block information flows and arbitrage.

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