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To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-9787.2009.00645.x Byline: Joris Pinkse (1), Margaret E. Slade (2) Abstract: ABSTRACT. The purpose of this paper is threefold. First, we give an overview of the general direction the spatial econometrics literature has taken without attempting to provide a representative survey of all interesting work that has appeared. Second, we identify a number of problems in spatial econometrics that are as yet unresolved. Finally, we provide advocacy for the notion that new spatial econometric theory should be inspired by actual empirical applications as opposed to being directed by what appears to be the most obvious extension of what is currently available. Author Affiliation: (1)Center for the Study of Auctions, Procurements, and Competition Policy (CAPCP), Department of Economics, The Pennsylvania State University, 608 Kern Graduate Building, University Park 16802. E-mail:joris@psu.edu (2)Department of Economics, The University of British Columbia 997-1873 East Mall, Vancouver, BC V6T1Z1, Canada. E-mail:m.slade@mac.com Article History: Received: April 2009; revised: June 2009; accepted: June 2009.

Mergers in the UK brewing industry have reduced the number of national brewers from six to four. The number of brands, in contrast, has remained relatively constant. We analyze the effects of mergers on brand competition and pricing. Brand-level demand equations are estimated from a panel of draft beers. To model brand-substitution possibilities, we estimate the matrix of cross-price elasticities semiparametrically. Our structural model is used to assess the strength of brand competition along various dimensions and to evaluate the mergers. In particular, we compute equilibria of pricing games with different numbers of players. JEL classification: L13; L41; L66; L81 Keywords: Beer; Mergers; Brand competition; Differentiated products; Semiparametric instrumental-variable estimation