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When is concentration beneficial? Evidence from U.S. manufacturing

Author

Listed:
  • Rigoberto A. López

    (Department of Agricultural and Resource Economics, University of Conneticut.)

  • Elena López

    (Departamento de Economía , Universidad de Alcalá.)

  • Carmen Liron-Espana

    (System Planning, ISO-NE.)

Abstract

This article estimates the impact of industrial concentration on market power and cost and then links the ensuing welfare changes to market structure characteristics using a sample of 232 U.S. manufacturing industries. Empirical results indicate that further increases in concentration would enhance welfare in 70% of the industries due to widespread efficiency gains, although these would generally not be passed on to consumers. From a social standpoint, further concentration is more likely to be beneficial in industries with economies of size, high export intensity, which are engaged in consumer-oriented goods, face larger markets, and have low or moderate levels of initial concentration.

Suggested Citation

  • Rigoberto A. López & Elena López & Carmen Liron-Espana, 2009. "When is concentration beneficial? Evidence from U.S. manufacturing," Alcamentos 0901, Universidad de Alcalá, Departamento de Economía..
    • Handle: RePEc:alc:alcamo:0901
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    References listed on IDEAS

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    More about this item

    Keywords

    Concentration; welfare; economies of size; market power; manufacturing;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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