Distributional Effects of Competition: A Simulation Approach

32 Pages Posted: 20 Jan 2021

See all articles by Carlos Rodríguez-Castelán

Carlos Rodríguez-Castelán

World Bank

Abdelkrim Araar

Université Laval

Eduardo Malásquez

World Bank

Sergio Olivieri

World Bank

Tara Vishwanath

World Bank - Economic Development Institute

Multiple version iconThere are 2 versions of this paper

Abstract

Understanding the economic and social effects of the recent global trends of rising market concentration and market power has become a policy priority. To fill this knowledge gap, this paper introduces a simple simulation method, the Welfare and Competition tool (WELCOM), to estimate with minimum data requirements the direct distributional effects of market concentration through the price channel. Using this simple yet novel tool, this paper illustrates the likely distributional effects of reducing concentration in two markets in Mexico that are known for their high level of concentration: mobile telecommunications and corn products. The results show that increasing competition from four to 12 firms in the mobile telecommunications industry and reducing the market share of the oligopoly in corn products would achieve a combined reduction of 0.8 percentage points in the poverty headcount as well as a decline of 0.32 points in the Gini coefficient.

JEL Classification: C15, D31, D42, D43, E37

Suggested Citation

Rodriguez-Castelan, Carlos and Araar, Abdelkrim and Malásquez, Eduardo and Olivieri, Sergio and Vishwanath, Tara, Distributional Effects of Competition: A Simulation Approach. IZA Discussion Paper No. 14043, Available at SSRN: https://ssrn.com/abstract=3767280

Carlos Rodriguez-Castelan (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Abdelkrim Araar

Université Laval ( email )

2214 Pavillon J-A. DeSeve
Quebec, Quebec G1K 7P4
Canada

Eduardo Malásquez

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Sergio Olivieri

World Bank

Tara Vishwanath

World Bank - Economic Development Institute ( email )

1818 H Street
Washington, DC 20433
United States
202-473-1152 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
4
Abstract Views
45
PlumX Metrics