Hostname: page-component-78c5997874-t5tsf Total loading time: 0 Render date: 2024-11-15T09:19:47.930Z Has data issue: false hasContentIssue false
  • English
  • Français

What Determines Welfare Losses from Oligopoly Power in the Food and Tobacco Industries?

Published online by Cambridge University Press:  15 September 2016

Sanjib Bhuyan  and
Rigoberto A. Lopez
Sanjib Bhuyan
Affiliation:
Department of Agriculture, Food, and Resource Economics, Rutgers University
Rigoberto A. Lopez
Affiliation:
Department of Agricultural and Resource Economics, University of Connecticut
Get access

Abstract

This paper estimates welfare losses in thirty-eight U.S. food and tobacco industries at the four-digit SIC level, then relates such losses to market structure and conduct variables to identify the welfare loss determinants. Empirical findings indicate that these losses are higher in markets characterized by high export intensity, high advertising expenditures, economies of scale, mergers and acquisitions, and market concentration. In addition, losses are larger in industries that sell finished consumer products and face lower import competition.

Type
Articles
Information
Agricultural and Resource Economics Review , Volume 27 , Issue 2 , October 1998 , pp. 258 - 265
Copyright
Copyright © 1998 Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Appelbaum, E. 1982. “The Estimation of the Degree of Oligopoly Power.” Journal of Econometrics 19: 287–99.Google Scholar
Amos, G., Perloff, G., and Perloff, J.M. 1996. “Estimating the Size Distribution of Firms Using Government Summary Statistics.” Journal of Industrial Economics 1: 69–80.Google Scholar
Auerbach, A.J., and Reishus, D. 1991. “The Impact of Taxation on Mergers and Acquisitions.” In Mergers and Acquisitions, ed Auerbach, A.J., pp. 69–85 (paperback ed.). Chicago: University of Chicago Press.Google Scholar
Bhuyan, S., and Lopez, R.A. 1995. “Welfare Losses under Alternative Oligopoly Regimes: The U.S. Food and Tobacco Manufacturing industries.” Journal of Agricultural and Applied Economics 27(2): 577–87.CrossRefGoogle Scholar
Bhuyan, S., and Lopez, R.A. 1997. “Oligopoly Power in the U.S. Food and Tobacco Industries.” American Journal of Agricultural Economics 79: 1035–43.CrossRefGoogle Scholar
Caves, R.E., Porter, M.E., Spence, A.M., and Scott, J.T. 1980. Competition in the Open Economy: A Model Applied to Canada. Cambridge: Harvard University Press.Google Scholar
Clarke, R., and Davies, S.W. 1982. “Market Structure and Price-Cost Margins.” Economica 49: 277–87.CrossRefGoogle Scholar
Connor, J.M., and Peterson, E.B. 1992. “Market Structure Determinants of National Brand Private Label Price Differences of Manufactured Food Products.” Journal of Industrial Economics 40: 157–71.Google Scholar
Connor, J.M., Rogers, R.T., Marion, B.W., and Mueller, W.F. 1985. The Food Manufacturing Industries: Structure, Strategies, Performance, and Policies. Lexington, Mass.: Lexington Books.Google Scholar
Cowling, K., and Waterson, M. 1976. “Price-Cost Margins and Market Structure.” Economica 43: 267–74.Google Scholar
Dickson, V.A., and Yu, W. 1989. “Welfare Losses in Canadian Manufacturing under Alternative Oligopoly Regimes.” International Journal of Industrial Organization 7: 257–67.CrossRefGoogle Scholar
Eckard, I.W. 1994. “Plant Level Economies of Scale and Industrial Concentration.” Quarterly Review of Economics and Finance 34: 173–83.CrossRefGoogle Scholar
Esposito, L., and Esposito, F. 1971. “Foreign Competition and Domestic Industry Profitability.” Review of Economics and Statistics 4: 343–53.Google Scholar
Ferguson, C.E. 1979. The Neoclassical Theory of Production and Distribution. Cambridge: Cambridge University Press.Google Scholar
Field, M.K., and Pagoulatos, E. 1996. “International Trade, Market Structure, and Cyclical Fluctuations in U.S. Food Manufacturing.” In Industrial Organization & Trade in the Food Industries, ed. Sheldon, I.M. and Abbot, P.C., pp. 17–34. Boulder, Colo.: Westview Press. Google Scholar
Gabel, H.L. 1983. “The Role of Buyer Power in Oligopoly Models: An Empirical Study.” Journal of Economics and Business 35: 95–108.Google Scholar
Gisser, M. 1982. “Welfare Implications of Oligopoly in U.S. Food Manufacturing.” American Journal of Agricultural Economics 63: 616–24.Google Scholar
Harris, F. 1988. “Testable Competing Hypotheses from Structure-Performance Theory: Efficient Structure versus Market Power.” Journal of Industrial Economics 34(3): 267–79.Google Scholar
Harvey, A.C. 1983. The Econometric Analysis of Time Series. Oxford: Philip Allan Publishers Ltd.Google Scholar
Imel, B., Behr, M.R., and Helmberger, P.G. 1972. Market Structure and Performance: The U.S. Food Processing Industries. Lexington, Mass.: Lexington Books.Google Scholar
Mergers and Acquisitions. 1986–88. Various issues.Google Scholar
Lunn, J. 1986. “An Empirical Analysis of Process and Product Patenting: A Simultaneous Equation Framework.” Journal of Industrial Economics 34: 319–30.Google Scholar
Martin, S. 1979. “Advertising, Concentration, and Profitability: The Simultaneity Problem.” Bell Journal of Economics 10(2): 639–47.CrossRefGoogle Scholar
Mueller, W.F., and Rogers, R.T. 1980. “The Role of Advertising in Changing Concentration of Manufacturing Industries.” Review of Economics and Statistics 52(1): 89–96.CrossRefGoogle Scholar
National Science Foundation (NSF). 1989. Research and Development Industry, 1987. Washington, D.C.: GPO.Google Scholar
Pagoulatos, E., and Sorenson, R. 1986. “What Determines the Elasticity of Industry Demand?” International Journal of Industrial Organization 3: 237–50.Google Scholar
Peterson, E.B., and Connor, J.M. 1995. “A Comparison of Oligopoly Welfare Loss Estimates for U.S. Food Manufacturing.” American Journal of Agricultural Economics 77: 300–308.Google Scholar
Pickering, M.H. 1991. “A Review of Corporate Restructuring Activity, 1980–90.” Staff study #161, Board of Governors of the Federal Reserve System. Washington, D.C. May.Google Scholar
Preston, W.P., and Connor, J.M. 1992. “An Economic Evaluation of Federal Antitrust Activity in the Manufacturing Industries.” Antitrust Bulletin, winter:969–96.Google Scholar
Scahill, E.M. Jr. 1985. The Effects of Research and Development on U.S. Market Structure. Ann Arbor: UMI Research Press.Google Scholar
Scherer, F.M., and Ross, D. 1990. Industrial Market Structure and Economic Performance. 3d ed. Boston: Houghton Mifflin. Google Scholar
Schmalensee, R. 1986. “Advertising and Market Structure.” In New Developments in the Analysis of Market Structure, ed. Stiglitz, J.E. and Mathewson, G.F. Cambridge: MIT Press.Google Scholar
Ståhlhammer, N.O. 1991. “Domestic Market Power and Foreign Trade.” International Journal of Industrial Organization 9: 407–24.Google Scholar
U.S. Department of Commerce, Bureau of Census. 1991. 1987 Census of Manufactures: General Summary and Industry Series. Washington, D.C.Google Scholar
U.S. Department of Commerce, Bureau of Census. 1992. 1982 Benchmark Input-Output Accounts of the United States. Washington, D.C.Google Scholar
U.S. Department of Commerce, Bureau of Census. Various. Annual Survey of Manufacturers. Washington, D.C.Google Scholar
U.S. Department of Commerce, Bureau of Economic Analysis. 1994. Statistical Abstracts of the United States, 1993. Washington, D.C.Google Scholar
U.S. Department of Justice and Federal Trade Commission. 1992. 1992 Horizontal Merger Guidelines. Washington, D.C.Google Scholar
U.S. International Trade Commission, Agriculture, Fisheries, and Forest Product Division. 1990. Data downloaded from tapes on imports, exports, and custom duties for 1987 across food and tobacco manufacturing sectors (four-digit SIC level), provided by David Ingersoll. December.Google Scholar
Willner, J. 1989. “Price Leadership and Welfare Losses in U.S. Manufacturing: Comment.” American Economic Review 79: 604–13.Google Scholar
Wilner, J. and Ståhl., L. 1992. “Where Are the Welfare Losses of Imperfect Competition Large?” European Journal of Political Economy 8: 477–91.Google Scholar