Estimates of the Cost of Monopoly in Australian Manufacturing.
by
Robert Dixon, Alan Gunther and Muhammad Mahmood.
June 1996
Department of Economics. University of Melbourne. Parkville Victoria
3052 Australia
ABSTRACT
In this paper we present new estimates of the degree of welfare loss
in Australian manufacturing for the period 1982/3-1984/5. The measure suggested
by Cowling & Mueller is modified to take into account various forms
of oligopoly. The main conclusion of our paper is that the social costs
of monopoly in Australia are likely to be substantially higher than previous
estimates have suggested. We also look at the characteristics of the industries
which have high ratios of welfare loss to turnover and estimate a simple
econometric model of the welfare loss by industry. There appears to be
a relationship between measured welfare loss and both the capital-output
ratio and the degree of concentration in the industry.
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