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What Determines Welfare Losses from Oligopoly Power in the Food and Tobacco Industries?

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  • Bhuyan, Sanjib
  • Lopez, Rigoberto A.

Abstract

This paper estimates welfare losses in thirty-eight U.S. food and tobacco industries at the four-digit SIC level, then relates such losses to market structure and conduct variables to identify the welfare loss determinants. Empirical findings indicate that these losses are higher in markets characterized by high export intensity, high advertising expenditures, economies of scale, mergers and acquisitions, and market concentration. In addition, losses are larger in industries that sell finished consumer products and face lower import competition.

Suggested Citation

  • Bhuyan, Sanjib & Lopez, Rigoberto A., 1998. "What Determines Welfare Losses from Oligopoly Power in the Food and Tobacco Industries?," Agricultural and Resource Economics Review, Cambridge University Press, vol. 27(2), pages 258-265, October.
  • Handle: RePEc:cup:agrerw:v:27:y:1998:i:02:p:258-265_00
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    References listed on IDEAS

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    1. Golan, Amos & Judge, George & Perloff, Jeffrey M, 1996. "Estimating the Size Distribution of Firms Using Government Summary Statistics," Journal of Industrial Economics, Wiley Blackwell, vol. 44(1), pages 69-80, March.
    2. Connor, John M & Peterson, Everett B, 1992. "Market-Structure Determinants of National Brand-Private Label Price Differences of Manufactured Food Products," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 157-171, June.
    3. 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(2), pages 577-587, December.
    4. John M Connor & Everett B. Peterson, 1996. "A Comparison of Oligopoly Welfare Loss Estimates for U.S. Food Manufacturing: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 710-711.
    5. Pagoulatos, Emilio & Sorensen, Robert, 1986. "What determines the elasticity of industry demand?," International Journal of Industrial Organization, Elsevier, vol. 4(3), pages 237-250, September.
    6. Landis Gabel, H., 1983. "The role of buyer power in oligopoly models: An empirical study," Journal of Economics and Business, Elsevier, vol. 35(1), pages 95-108.
    7. Sanjib Bhuyan & Rigoberto A. Lopez, 1997. "Oligopoly Power in the Food and Tobacco Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 1035-1043.
    8. Cowling, Keith & Waterson, Michael, 1976. "Price-Cost Margins and Market Structure," Economica, London School of Economics and Political Science, vol. 43(171), pages 267-274, August.
    9. Clarke, Roger & Davies, Stephen W, 1982. "Market Structure and Price-Cost Margins," Economica, London School of Economics and Political Science, vol. 49(195), pages 277-287, August.
    10. 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(2), pages 1-11, December.
    11. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
    12. Dickson, V. A. & Yu, Weiqiu, 1989. "Welfare losses in Canadian manufacturing under alternative oligopoly regimes," International Journal of Industrial Organization, Elsevier, vol. 7(2), pages 257-267, June.
    13. Esposito, Louis & Esposito, Frances Ferguson, 1971. "Foreign Competition and Domestic Industry Profitability," The Review of Economics and Statistics, MIT Press, vol. 53(4), pages 343-353, November.
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    Cited by:

    1. Rezitis Anthony & Kalantzi Maria, 2012. "Measuring Market Power and Welfare Losses in the Greek Food and Beverages Manufacturing Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 10(1), pages 1-33, April.
    2. Chrysovalantis Amountzias, 2017. "An Investigation of the Degree of Market Power in the Greek Manufacturing and Service Industries," Journal of Industry, Competition and Trade, Springer, vol. 17(4), pages 447-464, December.
    3. Morrison Paul, Catherine J., 2000. "Productivity And Efficiency In The U.S. Food System, Or, Might Cost Factors Support Increasing Mergers And Concentration?," Working Papers 11983, University of California, Davis, Department of Agricultural and Resource Economics.
    4. Anthony Rezitis & Maria Kalantzi, 2011. "Investigating Market Structure of the Greek Manufacturing Industry: A Hall-Roeger Approach," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 39(4), pages 383-400, December.
    5. Bhuyan, Sanjib, 2003. "What Determines Vertical Mergers in U.S. Food Manufacturing Industries?," 2003 Annual meeting, July 27-30, Montreal, Canada 22146, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Sanjib Bhuyan, 2002. "Impact of Vertical Mergers on Industry Profitability: An Empirical Evaluation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(1), pages 61-79, February.

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