When is Concentration Beneficial?

Carmen Liron-Espana and Rigoberto Lopez

No 62, Food Marketing Policy Center Research Reports from University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy

Abstract: This paper separates market power and efficiency effects of concentration in a sample of 255 U.S. manufacturing industries and computes welfare changes from rises in concentration. The empirical findings reveal that in nearly two-third of the cases, consumers lose as efficiency gains are generally pocketed by the industries. From an aggregate welfare standpoint, concentration is found to be beneficial in nearly 70% of the cases, mostly for low and moderate levels of concentration being particularly against the public interest in highly concentrated markets. Overall, the results support the existing U.S. Federal Trade Commission guidelines for approval of mergers.

Keywords: concentration; marked power; efficiency; manufacturing; Industrial Organization (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zwi:fpcrep:062

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