Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/232795 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14043
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
poverty
inequality
market concentration
distributional effects
simulation
Mexico
JEL: 
C15
D31
D42
D43
E37
Document Type: 
Working Paper

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