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When cost improvements harm consumers

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Author Info
Philippe Bontems ()
Nicolas Gruyer ()
Abstract

This paper demonstrates that improving cost efficiency in a vertical structure might sometimes be detrimental to consumers. This is in stark contrast with the standard microeconomics result which suggests that the surplus generated by any efficiency gain in production is shared between firms and final consumers, depending on the degree of market power. These new results may apply in contexts such as the diffusion of knowledge and techniques and governmental intervention through income support programs. Copyright Springer Science+Business Media, LLC 2007

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File URL: http://hdl.handle.net/10.1007/s11151-007-9126-z
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Publisher Info
Article provided by Springer in its journal Review of Industrial Organization.

Volume (Year): 30 (2007)
Issue (Month): 1 (February)
Pages: 63-79
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:revind:v:30:y:2007:i:1:p:63-79

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Web page: http://www.springerlink.com/link.asp?id=100336

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Related research
Keywords: Oligopsonists; Retail; Vertical structure; Cost pass-through; L11; L12;

References listed on IDEAS
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  1. Sexton, Richard J. & Lavoie, Nathalie, 2001. "Food processing and distribution: An industrial organization approach," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 15, pages 863-932 Elsevier. [Downloadable!] (restricted)
  2. Barros, Pedro Pita & Brito, Duarte & de Lucena, Diogo, 2006. "Mergers in the food retailing sector: An empirical investigation," European Economic Review, Elsevier, vol. 50(2), pages 447-468, February. [Downloadable!] (restricted)
  3. Salinger, Michael A, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, MIT Press, vol. 103(2), pages 345-56, May. [Downloadable!] (restricted)
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This page was last updated on 2009-11-25.


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