Social Welfare and the Market Power-Efficiency Tradeoff in U.S. Food Processing: A Note
This article computes the welfare changes from increases in industrial concentration in a sample of 35 U.S. food manufacturing industries, taking into account oligopoly power and efficiency effects. It is estimated that a 1% across-the-board increase in the Herfindahl index would lead to an increase in aggregate social welfare (with increases in 74% of the industries), nearly neutral consumer welfare effects, and increases in producer welfare due to efficiency gains that are not passed on. The results call into question the conventional wisdom that considers welfare losses from market power without considering potential gains in production efficiency.
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Volume (Year): 1 (2002)
Issue (Month): 1 (October)
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- Carmen Liron-Espana & Rigoberto A. Lopez, 2001.
"When is Concentration Beneficial?,"
Food Marketing Policy Center Research Reports
062, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
- Liron-Espana, Carmen & Lopez, Rigoberto A., 2001. "When is Concentration Beneficial?," Research Reports 25201, University of Connecticut, Food Marketing Policy Center.
- Bhuyan, Sanjib & Lopez, Rigoberto A., 1995. "Welfare Losses Under Alternative Oligopoly Regimes: The U.S. Food and Tobacco Manufacturing Industries," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 27(02), pages 577-587, December.
- Everett B. Peterson & John M. Connor, 1995. "A Comparison of Oligopoly Welfare Loss Estimates for U.S. Food Manufacturing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 300-308.
- Rigoberto Lopez & Azzeddine Azzam & Carmen Lirón-España, 2002. "Market Power and/or Efficiency: A Structural Approach," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(2), pages 115-126, March.
- Bhuyan, Sanjib & Lopez, Rigoberto A., 1995. "Welfare Losses Under Alternative Oligopoly Regimes: The U.S. Food And Tobacco Manufacturing Industries," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(02), December.
- Azzam, Azzeddine M, 1997. "Measuring Market Power and Cost-Efficiency Effects of Industrial Concentration," Journal of Industrial Economics, Wiley Blackwell, vol. 45(4), pages 377-386, December. Full references (including those not matched with items on IDEAS)
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