Job Market Paper
"Adaptation and Survival in the Brewing Industry during Prohibition"
Can early exposure to demand reductions improve the performance of firms during future demand shocks? I focus on the American brewing industry during prohibition in the early twentieth century. Some breweries faced early reductions in demand when nearby counties introduced prohibition at the local level. Other breweries were insulated from local prohibitions until the start of federal prohibition, when the entire US prohibited the production and distribution of alcoholic drinks. I follow 1,300 breweries throughout both local and federal prohibitions, using firm-level data that I collected. Breweries that faced early reductions in demand were 12% more likely to survive the full prohibition period, from before local prohibition until the end of federal prohibition, than breweries that did not face early reductions in demand. This increase in survival occurred because a group of breweries made early investments in machinery that later facilitated product switching into soda and other foodstuffs. Based on a theoretical model and my identification strategy, I argue that this group of breweries would not have survived prohibition, had they not faced an early reduction in demand.
Work in Progress
"Industrial Relocation and Endogenous Trade Costs: How Brewing Moved West in the United States"
"On the Long Run Diffusion of Knowledge: from Brewing to Biotechnology"
with Michael Darby and Lynne Zucker
"Intra-national Trade Costs and the Structure of the Trucking Industry in Colombia"
with David Atkin and Andrés Clavijo
"Risk, Concentration and Market Power in the Banking Industry: Evidence from the Colombian System (1997-2006)"
with Jorge Tovar and Christian Jaramillo
Banks and Bank Systems, Vol. 6(1), 49-61, 2011.
Carlos Eduardo Hernández, UCLA Economics.