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Welfare Implications of Oligopoly in U.S. Food Manufacturing

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  • Micha Gisser

Abstract

A statistical procedure is used to show that increased concentration in U.S. food-manufacturing industries is associated with increased total input productivity. A price leadership model is employed in order to estimate total welfare loss. If an elasticity of −1 is assumed, deadweight loss to society is estimated at 0.5% of food value. If an elasticity of −0.5 is assumed, total loss to consumers amounts to 6.11% of food value, which is $10 billion in 1975. The increase in total factor productivity which is linked to concentration is roughly sufficient to offset the entire loss to consumers.

Suggested Citation

  • Micha Gisser, 1982. "Welfare Implications of Oligopoly in U.S. Food Manufacturing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(4), pages 616-624.
    • Handle: RePEc:oup:ajagec:v:64:y:1982:i:4:p:616-624.
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    File URL: http://hdl.handle.net/10.2307/1240570
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    Cited by:

    1. Puneet Prakash Kaur & Ravi Kiran, 2024. "Examining the Role of Market Concentration in Enhancing Total Factor Productivity: A Comparative Analysis of Selected Agri-based and Hi-Technology Sectors," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 2525-2548, March.
    2. Groenewald, J. A., 1986. "The Performance Of Past Food, Agricultural And Trade Policies: Implications For The Future," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 25(2), June.
    3. Sanjib Bhuyan & Rigoberto A. Lopez, 1998. "Oligopoly Power and Allocative Efficiency in US Food and Tobacco Industries," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(3), pages 434-442, September.
    4. Minseong Kang & Byeong‐Il Ahn, 2023. "Market power and cost‐efficiency effects: Broiler packing industry in South Korea," Agribusiness, John Wiley & Sons, Ltd., vol. 39(4), pages 1157-1172, October.
    5. Menapace, Luisa, 2010. "Geographical indications and quality promotion in food and agricultural markets: domestic and international issues," ISU General Staff Papers 201001010800002558, Iowa State University, Department of Economics.
    6. Catherine C. Benjamin & Chantal Le Mouël & Yves Surry, 1997. "Measuring market power in French food manufacturing : a preliminary analysis [Mesure du pouvoir de marché dans l'industrie agro-alimentaire française]," Post-Print hal-02838100, HAL.

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