A COMPARISON OF OLIGOPOLY WELFARE LOSS ESTIMATES FOR US FOOD MANUFACTURING

Capitalizing on theoretical advances in calculating deadweight welfare losses due to imperfect competition, we compare eight empirical estimates for the U.S. food manufacturing industries. The estimates incorporate varying theoretical assumptions about demand, supply, and firm pricing behavior; and utilize various data sources, time periods, and assumptions about the proper competitive benchmark. While the estimates of average allocative losses range widely, there is a high degree of congruence in the rankings of economic losses due to market power. Thus, from the perspective of efficient antitrust enforcement, the newer theoretical oligopoly approaches and the traditional structure-conduct-performance models would target similar industries.