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Revisiting the Price Effects of Rising Concentration in U.S. Food Manufacturing

Author

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  • Dickson Vaughan A

    (University of New Brunswick)

  • Sun Yingfeng

    (University of New Brunswick)

Abstract

This paper follows Lopez et al. (2002) by also focusing on the market power and efficiency consequences of increased concentration in U.S. food manufacturing industries. However, unlike these authors, who employed the techniques of the new empirical industrial organization to investigate increasing concentration, our approach is based on the older tradition of the structure-conduct-performance school. A consequence is our results turn out to be quite different. Unlike Lopez et al. (2002), efficiency effects dominate, meaning that the overall effect of rising concentration has been to lower prices. We suggest the difference is due to the inability of NEIO models, as presently constructed, to adequately deal with technological change, particularly technological change that applies to only a sub-set of firms. It is this kind of technological change that produces shifting advantages among firms and should be an important factor behind changes in concentration.

Suggested Citation

  • Dickson Vaughan A & Sun Yingfeng, 2004. "Revisiting the Price Effects of Rising Concentration in U.S. Food Manufacturing," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 2(1), pages 1-17, December.
    • Handle: RePEc:bpj:bjafio:v:2:y:2004:i:1:n:10
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    References listed on IDEAS

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    1. Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Business Cycles and the Relationship Between Concentration and Price-Cost Margins," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 1-17, Spring.
    2. 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.
    3. Gisser, Mica, 1999. "Dynamic Gains and Static Losses in Oligopoly: Evidence from the Beer Industry," Economic Inquiry, Western Economic Association International, vol. 37(3), pages 554-575, July.
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    Cited by:

    1. Lopez, Rigoberto A. & Liron-Espana, Carmen, 2005. "Price and Cost Impacts of Concentration in Food Manufacturing Revisited," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 23(1).

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