We study whether consumer taste is biased towards beer brands originated from countries where the ancestors of consumers came. The empirical analysis takes advantage of a single Chicago-area grocery store chain, Dominick’s, having stores located at census tracts with different ethnic background composition. Combining the sales data at store-UPC level controlling for prices and brand offerings with 173 beer brands’ origin information scraped from one of the most visited beer online platform, we find significant home bias in consumption. The result sheds light on why this grocery chain has its market share plummeted after it was taken over by Safeway and replaced with house branded products.

We study whether consumer taste is biased towards beer brands originated from countries where the ancestors of consumers came. The empirical analysis takes advantage of a single Chicago-area grocery store chain, Dominick’s, having stores located at census tracts with different ethnic background composition. Combining the sales data at store-UPC level controlling for prices and brand offerings with 173 beer brands’ origin information scraped from one of the most visited beer online platform, we find significant home bias in consumption. The result sheds light on why this grocery chain has its market share plummeted after it was taken over by Safeway and replaced with house branded products.

One of the central questions revolving multinational firm theory is whether firms choose to internalize or engage in arm’s length licensing when entering a foreign market. Decisions on firm boundaries become more complicated when firms carry more than one brand and multiple stages of operation before reaching consumers. This paper compares two approaches in the literature concerning a multinational firm’s organization of foreign operation, namely the transaction-cost theory and property-rights theory. The two differ in whether efficiency losses from incomplete contracts are endogenous and whether they are of the same nature even for integrated relationships. Two models yield opposite predictions which open the door for empirical investigation that I test using a unique brand-market level data in the beer industry. I empirically characterize the optimal allocation of ownership rights by brand quality, contractual environment, market size, competition structure, and the existed band portfolio of the licensor and licensee. Results support the property-right theory for beer companies. I also overcome the data limitation on licensing agreements and develop an innovative way to infer contractual relationship by combining brands’ ownership information at the national and global level.