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

Vaughan Dickson () and Sun Yingfeng
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Sun Yingfeng: University of New Brunswick

Journal of Agricultural & Food Industrial Organization, 2004, vol. 2, issue 1, 17

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.

Keywords: food industry; concentration; prices; costs (search for similar items in EconPapers)
Date: 2004
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DOI: 10.2202/1542-0485.1103

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