NEW ESTIMATES OF WELFARE AND CONSUMER LOSSES IN U.S. FOOD MANUFACTURING
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In the past 15 years, industrial-organization economists have significantly expanded the
range of algorithms for calculating welfare losses due to imperfect competition. We compare
eleven empirical estimates of economic losses due to market power in 47 U.S. food
manufacturing industries, almost all of them previously unpublished. Each of the studies
incorporate different theoretical assumptions about demand conditions, supply conditions, or
industry pricing behavior; or they utilize various data sources, time periods, and assumptions
about the proper competitive benchmark. The estimates of average allocative losses due
imperfect competition range from 0.2 percent to an impossibly high 289 percent of industry
output; consumer losses range from 6.0 percent to 816 percent. However, there is a high
degree of congruence in the rankings of economic losses due to market power. Hence, from
the perspective of antitrust enforcement, the choice of industry targets has not been greatly
altered by advances in estimation techniques.