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.Food and tobacco industries, Market power, Welfare loss, Industrial Organization,

OPTIMAL TRANSBOUNDARY WATER DIVERSION: THE CASE OF THE SENEGAL RIVER

This paper ascertains the costs and benefits of diverting water from the Senegal River. Two scenarios are compared to the status quo of inaction: the social planner and the competitive scenarios. Although these two scenarios yield positive present values of net benefits, the social planner scenario would use smaller quantities of water while providing the highest net benefits to society. Given that the benefits are one-sided while the costs are spread over several constituencies that share the river, it is possible for the gainers to compensate the losers, especially the farmers of flood recession agriculture identified as the main deprived group.Resource /Energy Economics and Policy,

The Impact of Imports on Price-Cost Margins: An Empirical Illustration

This article decomposes the impact of imports on domestic price-cost margins into separate price and cost effects. Using data from 24 food-processing industries, the empirical results show that although the direct impact of imports on prices is always negative, a positive net impact on price-cost margins occurs in industries characterized by low own-price elasticity of demand and diseconomies of scale. Further results show that the disciplining effect of imports is more preponderant the lower the degree of domestic competition.Market power, imports, market structure, international trade, food industry, Agribusiness, Demand and Price Analysis, International Relations/Trade,

STRUCTURAL ADJUSTMENT PROGRAMS AND PEANUT MARKET PERFORMANCE IN SENEGAL

The impacts of Structural Adjustment Programs (SAPs) on social welfare are investigated using data from the Senegalese peanut sector. The findings suggest that SAP policies resulted in dramatic decreases in peanut production, undermining the profitability of the peanut processing plants as well. Overall, the Senegalese society suffered net welfare losses.International Development, Production Economics,

CHANGES IN THE U.S. DEMAND FOR SUGAR AND IMPLICATIONS FOR IMPORT POLICIES

The thrust of this paper is to identify and measure structural changes in the U.S. demand for sugar and to derive subsequent implications for import restriction policies. Empirical results indicate that changes in consumer preferences and the availability of closer and cheaper sweeteners in food processing, especially high fructose corn syrup (HFCS), are exerting a downward pressure on sugar demand. As the U.S. demand for sugar decreases and the food industry adjusts faster to sweetener choices, the U.S. government would have to impose more restrictive import barriers to maintain prices to domestic sugar and HFCS producers. Furthermore, the welfare impact of U.S. sugar policy options on domestic consumers and food processors will be lessened.Demand and Price Analysis, International Relations/Trade,

When is Concentration Beneficial?

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.concentration, marked power, efficiency, manufacturing, Industrial Organization,

TESTING PROTECTION FOR SALE IN THE FOOD INDUSTRIES

This paper tests the Grossman-Helpman Protection for Sale model using panel data from U.S. food processing industries with endogenous protection, import penetration, and political campaign. The results support the key predictions of the model: organized industries are granted higher protection that decreases with import penetration and the price elasticity of imports. Furthermore, the presence of import quotas raises the level of protection substantially. The estimated weight on aggregate welfare is strikingly similar those found by Goldberg and Maggi (1999) and Gawande and Bandopadhyay (2000), implying that protection is not for sale in these industries.Agribusiness,

MARKET-BASED LAND REFORM AND FARM EFFICIENCY IN COLOMBIA: A DEA APPROACH

This paper uses Data Envelopment Analysis to measure scale and technical efficiencies of 925 farms in rural Colombia and a Tobit model to identify the effects of land market characteristics on efficiency. Findings indicate that although larger farms are more scale efficient, they are not more technical efficient than small farms. Participation in land markets increases technical efficiency, indicating a positive potential role for market-based land reform. Further results show that intensity of violence in rural areas results in increased scale efficiency, allegedly through consolidation of land ownership.Industrial Organization, Productivity Analysis,

The Degree and Sources of Oligopsony Power: An Application to the Haitian Coffee Market

Agribusiness, Industrial Organization,

WHAT DETERMINES WELFARE LOSSES FROM OLIGOPOLY POWER IN THE FOOD AND TOBACCO INDUSTRIES?

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.Agribusiness,