AbstractEarlier papers reach conflicting conclusions about the effect of concentration in the US brewing industry. This paper argues that stock market data on a more recent set of events, the intense merger activity of 1981–2, can help to resolve these differences. The results indicate that mergers between brewers, excluding the two industry leaders (Anheuser‐Busch and Miller Brewing), enhance industry performance by enabling smaller brewers to exploit the scale economies enjoyed by the large o