The Poverty Effects of Market Concentration

This paper contributes to the limited literature on the welfare impacts of market concentration by developing a simple model that shows how exogenous variations in market power affect poverty. Increased market power leads to economy-wide welfare lo...

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Main Author:	Rodriguez Castelan, Carlos
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2015
Subjects:	PROFIT MAXIMIZATION OLIGOPOLISTIC MARKET RETAILING MARKET STRUCTURE TRADE CREDIT DEMAND FUNCTIONS INCOME GUARANTEES PERFECT COMPETITION MARGINAL COST EXCHANGE UTILITY MAXIMIZATION DEVELOPING COUNTRIES TAX COLLECTION MARGINAL PRODUCT POLITICAL ECONOMY REVENUES RETAILING INDUSTRY WELFARE INCENTIVES EQUILIBRIUM DISTRIBUTION MODELS PRICING PRICE TAX OWNERSHIP PRODUCT QUALITY INCOME TAX WEALTH INTERNATIONAL BANK ECONOMIC STRUCTURES DEVELOPING COUNTRY OLIGOPOLY RETAIL LABOR MARKET MARKET ENTRY PRICE STRUCTURE CONSUMER SURPLUS MARKET CONCENTRATION GOVERNMENT POLICY DEVELOPMENT ECONOMICS PUBLIC FUNDS INCOME INEQUALITY SURPLUS PRODUCTIVITY COST OF LIVING OPTIONS GLOBALIZATION FAILURES MONETARY FUND MONOPOLY BARRIERS TO ENTRY INCOME EFFECTS MARKETS HOUSEHOLD INCOME ENTRY BARRIERS COMPETITIVE MARKET ECONOMIC POLICIES PRODUCT UTILITY NOMINAL INCOME EXOGENOUS INCOME FINANCE ECONOMIC RESEARCH TAX POLICIES CONSUMER GROUPS TAXES EXPENDITURE EQUILIBRIUM ANALYSIS EQUITY CONSUMPTION SURPLUSES SUBSTITUTE GOOD WAGES COMPETITION POLICY MARKET FAILURES VALUE RETAIL STORES CREDIT DEMAND WELFARE ANALYSIS UTILITY FUNCTION AGGREGATE DEMAND DEMAND FUNCTION INEFFICIENCY ECONOMY CONSUMERS PROPERTY PRICE EFFECT MEASUREMENT SHARES MARKET INCOME EFFECT POLICY MARKET COMPETITION HOMOGENEOUS GOOD MARKET YIELDS FUNCTIONAL FORMS TAXATION PARTIAL EQUILIBRIUM ANALYSIS TRADE GOODS THEORY GENERAL EQUILIBRIUM ANALYSIS INDUSTRIAL ECONOMICS INVESTMENT LOWER PRICES SHARE INVESTMENT CLIMATE MONOPOLISTIC MARKET POVERTY MARKET CONCENTRATIONS SUPPLY COMPETITIVE MARKETS MARKET POWER POLICY IMPLICATIONS REVENUE PROFIT CONSUMER PRICES OFFSETS PROFITS COMMODITY PRICES OUTCOMES POSITIVE EFFECTS PRICES DEMOCRATIC PROCESSES DEVELOPMENT BANK DEVELOPMENT POLICY COMPETITION
Online Access:	http://documents.worldbank.org/curated/en/2015/12/25672296/poverty-effects-market-concentration http://hdl.handle.net/10986/23479

id	okr-10986-23479
recordtype	oai_dc
spelling	okr-10986-234792021-04-23T14:04:15Z The Poverty Effects of Market Concentration Rodriguez Castelan, Carlos PROFIT MAXIMIZATION OLIGOPOLISTIC MARKET RETAILING MARKET STRUCTURE TRADE CREDIT DEMAND FUNCTIONS INCOME GUARANTEES PERFECT COMPETITION MARGINAL COST EXCHANGE UTILITY MAXIMIZATION DEVELOPING COUNTRIES TAX COLLECTION MARGINAL PRODUCT POLITICAL ECONOMY REVENUES RETAILING INDUSTRY WELFARE INCENTIVES EQUILIBRIUM DISTRIBUTION MODELS PRICING PRICE TAX OWNERSHIP PRODUCT QUALITY INCOME TAX WEALTH INTERNATIONAL BANK ECONOMIC STRUCTURES DEVELOPING COUNTRY OLIGOPOLY RETAIL LABOR MARKET MARKET ENTRY PRICE STRUCTURE CONSUMER SURPLUS MARKET CONCENTRATION GOVERNMENT POLICY DEVELOPMENT ECONOMICS PUBLIC FUNDS INCOME INEQUALITY SURPLUS PRODUCTIVITY COST OF LIVING OPTIONS GLOBALIZATION FAILURES MONETARY FUND MONOPOLY BARRIERS TO ENTRY INCOME EFFECTS MARKETS HOUSEHOLD INCOME ENTRY BARRIERS COMPETITIVE MARKET ECONOMIC POLICIES PRODUCT UTILITY NOMINAL INCOME EXOGENOUS INCOME FINANCE ECONOMIC RESEARCH TAX POLICIES CONSUMER GROUPS TAXES EXPENDITURE EQUILIBRIUM ANALYSIS EQUITY CONSUMPTION SURPLUSES SUBSTITUTE GOOD WAGES COMPETITION POLICY MARKET FAILURES VALUE RETAIL STORES CREDIT DEMAND WELFARE ANALYSIS UTILITY FUNCTION AGGREGATE DEMAND DEMAND FUNCTION INEFFICIENCY ECONOMY CONSUMERS PROPERTY PRICE EFFECT MEASUREMENT SHARES MARKET INCOME EFFECT POLICY MARKET COMPETITION HOMOGENEOUS GOOD MARKET YIELDS FUNCTIONAL FORMS TAXATION PARTIAL EQUILIBRIUM ANALYSIS TRADE GOODS THEORY GENERAL EQUILIBRIUM ANALYSIS INDUSTRIAL ECONOMICS INVESTMENT LOWER PRICES SHARE INVESTMENT CLIMATE MONOPOLISTIC MARKET POVERTY MARKET CONCENTRATIONS SUPPLY COMPETITIVE MARKETS MARKET POWER POLICY IMPLICATIONS REVENUE PROFIT CONSUMER PRICES OFFSETS PROFITS COMMODITY PRICES OUTCOMES POSITIVE EFFECTS PRICES DEMOCRATIC PROCESSES DEVELOPMENT BANK DEVELOPMENT POLICY COMPETITION This paper contributes to the limited literature on the welfare impacts of market concentration by developing a simple model that shows how exogenous variations in market power affect poverty. Increased market power leads to economy-wide welfare losses, because it raises the prices of goods and services for all agents in an economy and thus reduces the relative incomes of households, particularly among the poor. Declines in poverty in this context are only possible in the case wherein the poor have access to a share of oligopolistic rents. Although this scenario seems highly unlikely, this result has important implications for public policy, particularly for economies with less-than-perfect markets and social objectives of poverty eradication. This result suggest the possibility of taxing extranormal rents extracted by firms with market power and redistributing them through targeted lump-sum social transfers, thereby contributing to poverty reduction by mitigating welfare losses from the negative price effect. 2015-12-22T17:00:40Z 2015-12-22T17:00:40Z 2015-12 Working Paper http://documents.worldbank.org/curated/en/2015/12/25672296/poverty-effects-market-concentration http://hdl.handle.net/10986/23479 English en_US Policy Research Working Paper;No. 7515 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	PROFIT MAXIMIZATION OLIGOPOLISTIC MARKET RETAILING MARKET STRUCTURE TRADE CREDIT DEMAND FUNCTIONS INCOME GUARANTEES PERFECT COMPETITION MARGINAL COST EXCHANGE UTILITY MAXIMIZATION DEVELOPING COUNTRIES TAX COLLECTION MARGINAL PRODUCT POLITICAL ECONOMY REVENUES RETAILING INDUSTRY WELFARE INCENTIVES EQUILIBRIUM DISTRIBUTION MODELS PRICING PRICE TAX OWNERSHIP PRODUCT QUALITY INCOME TAX WEALTH INTERNATIONAL BANK ECONOMIC STRUCTURES DEVELOPING COUNTRY OLIGOPOLY RETAIL LABOR MARKET MARKET ENTRY PRICE STRUCTURE CONSUMER SURPLUS MARKET CONCENTRATION GOVERNMENT POLICY DEVELOPMENT ECONOMICS PUBLIC FUNDS INCOME INEQUALITY SURPLUS PRODUCTIVITY COST OF LIVING OPTIONS GLOBALIZATION FAILURES MONETARY FUND MONOPOLY BARRIERS TO ENTRY INCOME EFFECTS MARKETS HOUSEHOLD INCOME ENTRY BARRIERS COMPETITIVE MARKET ECONOMIC POLICIES PRODUCT UTILITY NOMINAL INCOME EXOGENOUS INCOME FINANCE ECONOMIC RESEARCH TAX POLICIES CONSUMER GROUPS TAXES EXPENDITURE EQUILIBRIUM ANALYSIS EQUITY CONSUMPTION SURPLUSES SUBSTITUTE GOOD WAGES COMPETITION POLICY MARKET FAILURES VALUE RETAIL STORES CREDIT DEMAND WELFARE ANALYSIS UTILITY FUNCTION AGGREGATE DEMAND DEMAND FUNCTION INEFFICIENCY ECONOMY CONSUMERS PROPERTY PRICE EFFECT MEASUREMENT SHARES MARKET INCOME EFFECT POLICY MARKET COMPETITION HOMOGENEOUS GOOD MARKET YIELDS FUNCTIONAL FORMS TAXATION PARTIAL EQUILIBRIUM ANALYSIS TRADE GOODS THEORY GENERAL EQUILIBRIUM ANALYSIS INDUSTRIAL ECONOMICS INVESTMENT LOWER PRICES SHARE INVESTMENT CLIMATE MONOPOLISTIC MARKET POVERTY MARKET CONCENTRATIONS SUPPLY COMPETITIVE MARKETS MARKET POWER POLICY IMPLICATIONS REVENUE PROFIT CONSUMER PRICES OFFSETS PROFITS COMMODITY PRICES OUTCOMES POSITIVE EFFECTS PRICES DEMOCRATIC PROCESSES DEVELOPMENT BANK DEVELOPMENT POLICY COMPETITION
spellingShingle	PROFIT MAXIMIZATION OLIGOPOLISTIC MARKET RETAILING MARKET STRUCTURE TRADE CREDIT DEMAND FUNCTIONS INCOME GUARANTEES PERFECT COMPETITION MARGINAL COST EXCHANGE UTILITY MAXIMIZATION DEVELOPING COUNTRIES TAX COLLECTION MARGINAL PRODUCT POLITICAL ECONOMY REVENUES RETAILING INDUSTRY WELFARE INCENTIVES EQUILIBRIUM DISTRIBUTION MODELS PRICING PRICE TAX OWNERSHIP PRODUCT QUALITY INCOME TAX WEALTH INTERNATIONAL BANK ECONOMIC STRUCTURES DEVELOPING COUNTRY OLIGOPOLY RETAIL LABOR MARKET MARKET ENTRY PRICE STRUCTURE CONSUMER SURPLUS MARKET CONCENTRATION GOVERNMENT POLICY DEVELOPMENT ECONOMICS PUBLIC FUNDS INCOME INEQUALITY SURPLUS PRODUCTIVITY COST OF LIVING OPTIONS GLOBALIZATION FAILURES MONETARY FUND MONOPOLY BARRIERS TO ENTRY INCOME EFFECTS MARKETS HOUSEHOLD INCOME ENTRY BARRIERS COMPETITIVE MARKET ECONOMIC POLICIES PRODUCT UTILITY NOMINAL INCOME EXOGENOUS INCOME FINANCE ECONOMIC RESEARCH TAX POLICIES CONSUMER GROUPS TAXES EXPENDITURE EQUILIBRIUM ANALYSIS EQUITY CONSUMPTION SURPLUSES SUBSTITUTE GOOD WAGES COMPETITION POLICY MARKET FAILURES VALUE RETAIL STORES CREDIT DEMAND WELFARE ANALYSIS UTILITY FUNCTION AGGREGATE DEMAND DEMAND FUNCTION INEFFICIENCY ECONOMY CONSUMERS PROPERTY PRICE EFFECT MEASUREMENT SHARES MARKET INCOME EFFECT POLICY MARKET COMPETITION HOMOGENEOUS GOOD MARKET YIELDS FUNCTIONAL FORMS TAXATION PARTIAL EQUILIBRIUM ANALYSIS TRADE GOODS THEORY GENERAL EQUILIBRIUM ANALYSIS INDUSTRIAL ECONOMICS INVESTMENT LOWER PRICES SHARE INVESTMENT CLIMATE MONOPOLISTIC MARKET POVERTY MARKET CONCENTRATIONS SUPPLY COMPETITIVE MARKETS MARKET POWER POLICY IMPLICATIONS REVENUE PROFIT CONSUMER PRICES OFFSETS PROFITS COMMODITY PRICES OUTCOMES POSITIVE EFFECTS PRICES DEMOCRATIC PROCESSES DEVELOPMENT BANK DEVELOPMENT POLICY COMPETITION Rodriguez Castelan, Carlos The Poverty Effects of Market Concentration
relation	Policy Research Working Paper;No. 7515
description	This paper contributes to the limited literature on the welfare impacts of market concentration by developing a simple model that shows how exogenous variations in market power affect poverty. Increased market power leads to economy-wide welfare losses, because it raises the prices of goods and services for all agents in an economy and thus reduces the relative incomes of households, particularly among the poor. Declines in poverty in this context are only possible in the case wherein the poor have access to a share of oligopolistic rents. Although this scenario seems highly unlikely, this result has important implications for public policy, particularly for economies with less-than-perfect markets and social objectives of poverty eradication. This result suggest the possibility of taxing extranormal rents extracted by firms with market power and redistributing them through targeted lump-sum social transfers, thereby contributing to poverty reduction by mitigating welfare losses from the negative price effect.
format	Working Paper
author	Rodriguez Castelan, Carlos
author_facet	Rodriguez Castelan, Carlos
author_sort	Rodriguez Castelan, Carlos
title	The Poverty Effects of Market Concentration
title_short	The Poverty Effects of Market Concentration
title_full	The Poverty Effects of Market Concentration
title_fullStr	The Poverty Effects of Market Concentration
title_full_unstemmed	The Poverty Effects of Market Concentration
title_sort	poverty effects of market concentration
publisher	World Bank, Washington, DC
publishDate	2015
url	http://documents.worldbank.org/curated/en/2015/12/25672296/poverty-effects-market-concentration http://hdl.handle.net/10986/23479
_version_	1764453958464569344

The Poverty Effects of Market Concentration

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