WELFARE LOSSES UNDER ALTERNATIVE OLIGOPOLY REGIMES: THE U.S. FOOD AND TOBACCO MANUFACTURING INDUSTRIES

This article systematically estimates the allocative efficiency losses in the U.S. food and tobacco manufacturing industries under alternative oligopoly pricing regimes using a formal model of oligopoly. Using 1987 data for 44 industries and an industry-wide oligopoly pricing scheme, these losses were estimated at approximately 3% of sales--2% in the food industries and 19% in the tobacco industries. Five additional oligopoly pricing regimes, four of which are price leaderships, are simulated and their results compared and tested relative to the industry-wide pricing regime. Findings underscore the importance of cost structure assumptions and that the impact of the type of oligopoly behavior assumed is not as dramatic when differences in demand and cost specifications are smoothed out.


Variant title:
Oligopoly regimes
Issue Date:
1995-12
Publication Type:
Journal Article
Record Identifier:
http://ageconsearch.umn.edu/record/15269
PURL Identifier:
http://purl.umn.edu/15269
Published in:
Journal of Agricultural and Applied Economics, Volume 27, Number 2
Page range:
577-587
Total Pages:
11




 Record created 2017-04-01, last modified 2018-01-22

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