A1406
Title: A country of two theories: Coexistence of collusion and efficiency hypotheses
Authors: Wen-Jen Tsay - Soochow University (Taiwan) [presenting]
Abstract: The relationship between market concentration, labor productivity, and real output is examined, evaluating the efficiency and collusion hypotheses. An oligopolistic model is developed showing that, under technological progress, a positive concentration-output relationship arises in large and competitive markets, such as internationally exposed sectors, implying that the efficiency and collusion hypotheses can coexist within an economy. Using Taiwanese census data, concentration is found to reduce output in locally-oriented service sectors despite rising productivity, while it increases output in manufacturing sectors. These findings reveal sectoral heterogeneity and suggest that uniform antitrust enforcement may lead to over-deterrence risk in Taiwan's manufacturing sector.
