Rodriguez Castelan, Carlos2015-12-222015-12-222015-12https://hdl.handle.net/10986/23479This paper contributes to the limited literature on the welfare impacts of market concentration by developing a simple model that shows how exogenous variations in market power affect poverty. Increased market power leads to economy-wide welfare losses, because it raises the prices of goods and services for all agents in an economy and thus reduces the relative incomes of households, particularly among the poor. Declines in poverty in this context are only possible in the case wherein the poor have access to a share of oligopolistic rents. Although this scenario seems highly unlikely, this result has important implications for public policy, particularly for economies with less-than-perfect markets and social objectives of poverty eradication. This result suggest the possibility of taxing extranormal rents extracted by firms with market power and redistributing them through targeted lump-sum social transfers, thereby contributing to poverty reduction by mitigating welfare losses from the negative price effect.en-USCC BY 3.0 IGOPROFIT MAXIMIZATIONOLIGOPOLISTIC MARKETRETAILINGMARKET STRUCTURETRADE CREDITDEMAND FUNCTIONSINCOMEGUARANTEESPERFECT COMPETITIONMARGINAL COSTEXCHANGEUTILITY MAXIMIZATIONDEVELOPING COUNTRIESTAX COLLECTIONMARGINAL PRODUCTPOLITICAL ECONOMYREVENUESRETAILING INDUSTRYWELFAREINCENTIVESEQUILIBRIUMDISTRIBUTIONMODELSPRICINGPRICETAXOWNERSHIPPRODUCT QUALITYINCOME TAXWEALTHINTERNATIONAL BANKECONOMIC STRUCTURESDEVELOPING COUNTRYOLIGOPOLYRETAILLABOR MARKETMARKET ENTRYPRICE STRUCTURECONSUMER SURPLUSMARKET CONCENTRATIONGOVERNMENT POLICYDEVELOPMENT ECONOMICSPUBLIC FUNDSINCOME INEQUALITYSURPLUSPRODUCTIVITYCOST OF LIVINGOPTIONSGLOBALIZATIONFAILURESMONETARY FUNDMONOPOLYBARRIERS TO ENTRYINCOME EFFECTSMARKETSHOUSEHOLD INCOMEENTRY BARRIERSCOMPETITIVE MARKETECONOMIC POLICIESPRODUCTUTILITYNOMINAL INCOMEEXOGENOUS INCOMEFINANCEECONOMIC RESEARCHTAX POLICIESCONSUMER GROUPSTAXESEXPENDITUREEQUILIBRIUM ANALYSISEQUITYCONSUMPTIONSURPLUSESSUBSTITUTEGOODWAGESCOMPETITION POLICYMARKET FAILURESVALUERETAIL STORESCREDITDEMANDWELFARE ANALYSISUTILITY FUNCTIONAGGREGATE DEMANDDEMAND FUNCTIONINEFFICIENCYECONOMYCONSUMERSPROPERTYPRICE EFFECTMEASUREMENTSHARESMARKETINCOME EFFECTPOLICYMARKET COMPETITIONHOMOGENEOUS GOODMARKET YIELDSFUNCTIONAL FORMSTAXATIONPARTIAL EQUILIBRIUM ANALYSISTRADEGOODSTHEORYGENERAL EQUILIBRIUM ANALYSISINDUSTRIAL ECONOMICSINVESTMENTLOWER PRICESSHAREINVESTMENT CLIMATEMONOPOLISTIC MARKETPOVERTYMARKET CONCENTRATIONSSUPPLYCOMPETITIVE MARKETSMARKET POWERPOLICY IMPLICATIONSREVENUEPROFITCONSUMER PRICESOFFSETSPROFITSCOMMODITY PRICESOUTCOMESPOSITIVE EFFECTSPRICESDEMOCRATIC PROCESSESDEVELOPMENT BANKDEVELOPMENT POLICYCOMPETITIONWorking PaperWorld Bank10.1596/1813-9450-7515