Dynamic Gains and Static Losses in Oligopoly: Evidence from the Beer Industry

Mica Gisser

Economic Inquiry, 1999, vol. 37, issue 3, 554-75

Abstract: The paper provides a new perspective on the estimate of the welfare losses due To oligopoly. I argue that the conventional analysis of monopoly/oligopoly welfare Losses can be misleading. If causation runs from investment in new technology to Increased concentration, dynamic gains from innovation should be taken into account for a fuller analysis of welfare losses. I use beer-industry data to demonstrate That technological changes Granger-cause beer prices, and beer prices Granger-cause the Herfindahl index. I then estimate the dynamic gains to consumers in the beer industry and find these gains to be impressive relative to conventional static Losses. Copyright 1999 by Oxford University Press.

Date: 1999
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