Agric. Econ. - Czech, 2011, 57(12):589-599 | DOI: 10.17221/103/2010-AGRICECON

The demand for beer in presence of past consumption and advertising in the Czech Republic

Concetta CASTIGLIONE1, Ladislava GROCHOVÁ2, Davide INFANTE3, Janna SMIRNOVA3
1 Department of Economics, Trinity College Dublin, Dublin, Ireland
2 Department of Economics, Faculty of Business and Economics, Mendel University in Brno, Brno, Czech Republic
3 Department of Economics and Statistics, University of Calabria, Cosenza, Italy

The paper focuses on beer consumption in the Czech Republic, the country with the highest beer consumption per capita in the world. To understand the recent beer-consumption behaviour, we use the monthly data from a three year period, 2006-2008, to estimate both the 2SLS and the SUR model charting the demand for beer extended to the past consumption and advertising expenditure. The demand for beer in the Czech Republic reacts more strongly to the changes in price than it does to the investments in advertising. The results suggest two implications for the policy-makers. Consumption is as sensitive to the price of beer and its alternatives as it is to advertising, so taxes or restrictions on advertising can affect the consumption of beer, considering the long tradition of Czech consumers in drinking beer as the strong role of the past consumption demonstrates.

Keywords: beer demand, alcoholic beverages, 2SLS, SUR, Czech Republic

Published: December 31, 2011  Show citation

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CASTIGLIONE C, GROCHOVÁ L, INFANTE D, SMIRNOVA J. The demand for beer in presence of past consumption and advertising in the Czech Republic. Agric. Econ. - Czech. 2011;57(12):589-599. doi: 10.17221/103/2010-AGRICECON.
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