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

Rigoberto Lopez, Elena López () and Carmen Liron-Espana
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Elena López: Departamento de Economía , Universidad de Alcalá.
Carmen Liron-Espana: System Planning, ISO-NE.

No 901, Alcamentos from Universidad de Alcalá, Departamento de Economía.

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.

Keywords: Concentration; welfare; economies of size; market power; manufacturing (search for similar items in EconPapers)
JEL-codes: D43 D61 F12 L11 L60 (search for similar items in EconPapers)
Pages: pages 22
Date: 2009
New Economics Papers: this item is included in nep-com, nep-eff, nep-mic and nep-ure
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