Title: The effect of market concentration on total welfare and its distribution in a supply chain case

Authors: Michal Weber; Tchai Tavor; Uriel Spiegel

Addresses: Faculty of Business Administration, Ono Academic College, Zahal Street, Kiriat Ono, 55500, Israel; Department of Management, Bar-Ilan University, 52900 Ramat Gan, Israel ' Department of Economics and Management, Yezreel Valley College, 19300, Israel ' Department of Management, Bar-Ilan University, 52900 Ramat Gan, Israel; Department of Economics, University of Pennsylvania, USA

Abstract: The concentration of industries affects the total welfare of the economy and changes its distribution among all economic agents. This paper examines an entire supply chain that includes multiple stages within the cheese industry. It presents the effect of market concentration levels on prices, quantities, profits, consumer surplus and the total welfare of all sectors involved in the production and consumption processes. Since increased concentration may lead to a higher degree of inequality, the relationship between inequality and efficiency is investigated. These issues are demonstrated by using a simplified structure of the cheese industry.

Keywords: concentration; Herfindahl-Hirschman index; HHI; supply chain; monopoly; retailers.

DOI: 10.1504/IJOR.2019.101203

International Journal of Operational Research, 2019 Vol.35 No.3, pp.424 - 445

Accepted: 29 Jul 2016
Published online: 23 Jul 2019 *

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