Industrialization and Consolidation in the U.S. Food Sector: Implications for Competition and Welfare

  • Sexton R
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Food processing, distribution, and retailing activities account for the majority of retail food and beverage costs for all major U.S. commodity groups, and the share of costs attributable to these marketing activities is rising over time. Consider, for example, the U.S. Department of Agriculture's "market basket" of food products. The farm share of the market basket remained stable at about 40% from 1960 to 1980 but declined rapidly since then, to 30% in 1990 and 22.2% in 1998. Given its expanding importance, behavior in the marketing sector has an increasingly important effect on the welfare of both consumers and farmers. Much has been written recently about the evolution of the food processing and distribution sector toward ever higher levels of food manufacturer and retailer concentration and increasing verticalcoordination across market stages. In some cases the changes have been sudden and dramatic, as a few examples illustrate: (...)

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  • Richard J Sexton

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