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Social Welfare and the Market Power-Efficiency Tradeoff in U.S. Food Processing: A Note
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October 1, 2002
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.
Published Online: 2002-10-1
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- Contract Design: A Note on Cash Settled Futures
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- An Essay on Cooperative Bargaining in U.S. Agricultural Markets
- Costly (Dis)Agreement: Optimal Intervention, Income Redistribution, and Transfer Efficiency of Output Quotas in the Presence of Cheating
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