IDEAS home Printed from https://ideas.repec.org/p/zwi/fpcrep/062.html
   My bibliography  Save this paper

When is Concentration Beneficial?

Author

Listed:
  • Carmen Liron-Espana
  • Rigoberto A. Lopez

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.

Suggested Citation

  • Carmen Liron-Espana & Rigoberto A. Lopez, 2001. "When is Concentration Beneficial?," Food Marketing Policy Center Research Reports 062, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    • Handle: RePEc:zwi:fpcrep:062
    as

    Download full text from publisher

    File URL: http://fmpc.uconn.edu/publications/rr/rr62.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Golan, Amos & Judge, George & Perloff, Jeffrey M, 1996. "Estimating the Size Distribution of Firms Using Government Summary Statistics," Journal of Industrial Economics, Wiley Blackwell, vol. 44(1), pages 69-80, March.
    2. Allen N. Berger & Timothy H. Hannan, 1998. "The Efficiency Cost Of Market Power In The Banking Industry: A Test Of The "Quiet Life" And Related Hypotheses," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 454-465, August.
    3. Martin, Stephen, 1988. "Market Power and/or Efficiency?," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 331-335, May.
    4. repec:bla:jindec:v:45:y:1997:i:4:p:377-86 is not listed on IDEAS
    5. Azzeddine M. Azzam, 1997. "Measuring Market Power and Cost‐efficiency Effects of Industrial Concentration," Journal of Industrial Economics, Wiley Blackwell, vol. 45(4), pages 377-386, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lopez Rigoberto A & Lirón-España Carmen, 2002. "Social Welfare and the Market Power-Efficiency Tradeoff in U.S. Food Processing: A Note," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 1(1), pages 1-10, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lopez, Rigoberto A. & Azzam, Azzeddine M. & Liron-Espana, Carmen, 2001. "Market Power and/or Efficiency: An Application to U.S. Food Processing," Research Reports 25160, University of Connecticut, Food Marketing Policy Center.
    2. Rigoberto Lopez & Elena Lopez & Carmen Lirón-España, 2014. "Who Benefits from Industrial Concentration? Evidence from U.S. Manufacturing," Journal of Industry, Competition and Trade, Springer, vol. 14(3), pages 303-317, September.
    3. Rigoberto A. López & Elena López & Carmen Liron-Espana, 2009. "When is concentration beneficial? Evidence from U.S. manufacturing," Alcamentos 0901, Universidad de Alcalá, Departamento de Economía..
    4. Delis, Manthos D. & Tsionas, Efthymios G., 2009. "The joint estimation of bank-level market power and efficiency," Journal of Banking & Finance, Elsevier, vol. 33(10), pages 1842-1850, October.
    5. Cisheng Wu & Teng Liu & Xiaoxian Yang, 2023. "Assessing the Impact of Digital Finance on the Total Factor Productivity of Commercial Banks: An Empirical Analysis of China," Mathematics, MDPI, vol. 11(3), pages 1-16, January.
    6. Mark Carlson & Kris James Mitchener, 2009. "Branch Banking as a Device for Discipline: Competition and Bank Survivorship during the Great Depression," Journal of Political Economy, University of Chicago Press, vol. 117(2), pages 165-210, April.
    7. Andriakopoulos, Konstantinos & Ladas, Augoustinos & Andriakopoulos, Panagiotis, 2020. "Bank efficiency and leasing in U.S.A. banking system," MPRA Paper 112645, University Library of Munich, Germany.
    8. Kwan, Simon H., 2006. "The X-efficiency of commercial banks in Hong Kong," Journal of Banking & Finance, Elsevier, vol. 30(4), pages 1127-1147, April.
    9. Barros, Carlos Pestana & Williams, Jonathan, 2013. "The random parameters stochastic frontier cost function and the effectiveness of public policy: Evidence from bank restructuring in Mexico," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 98-108.
    10. González, Luis Otero & Razia, Alaa & Búa, Milagros Vivel & Sestayo, Rubén Lado, 2017. "Competition, concentration and risk taking in Banking sector of MENA countries," Research in International Business and Finance, Elsevier, vol. 42(C), pages 591-604.
    11. Allen Berger & Robert DeYoung, 2001. "The Effects of Geographic Expansion on Bank Efficiency," Journal of Financial Services Research, Springer;Western Finance Association, vol. 19(2), pages 163-184, April.
    12. Cyree, Ken B. & Spurlin, W. Paul, 2012. "The effects of big-bank presence on the profit efficiency of small banks in rural markets," Journal of Banking & Finance, Elsevier, vol. 36(9), pages 2593-2603.
    13. Williams, Jonathan, 2004. "Determining management behaviour in European banking," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2427-2460, October.
    14. Steven J. Pilloff, 2002. "What's happened at divested bank offices? An empirical analysis of antitrust divestitures in bank mergers," Finance and Economics Discussion Series 2002-60, Board of Governors of the Federal Reserve System (U.S.).
    15. Corbae, Dean & D’Erasmo, Pablo, 2020. "Rising bank concentration," Journal of Economic Dynamics and Control, Elsevier, vol. 115(C).
    16. Turk Ariss, Rima, 2010. "On the implications of market power in banking: Evidence from developing countries," Journal of Banking & Finance, Elsevier, vol. 34(4), pages 765-775, April.
    17. Wu, Ji & Guo, Mengmeng & Chen, Minghua & Jeon, Bang Nam, 2019. "Market power and risk-taking of banks: Some semiparametric evidence from emerging economies," Emerging Markets Review, Elsevier, vol. 41(C).
    18. Ronchi, Loraine, 2006. "Fairtrade and market failures in agricultural commodity markets," Policy Research Working Paper Series 4011, The World Bank.
    19. Dima, Bogdan & Dincă, Marius Sorin & Spulbăr, Cristi, 2014. "Financial nexus: Efficiency and soundness in banking and capital markets," Journal of International Money and Finance, Elsevier, vol. 47(C), pages 100-124.
    20. José Eduardo Gómez Gónzalez & Jorge Marío Uribe Gil & Hernán Piñeros Gordo, 2009. "Determinantes de la Rentabilidad de los Bancos en Colombia: ¿Importa la Tasa de Cambio?," Borradores de Economia 556, Banco de la Republica de Colombia.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zwi:fpcrep:062. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/dauctus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.