The Efficiency Cost of Market Power in the Banking Industry
A Test of the “Quiet Life” and Related Hypotheses
Bibliographic Data
| ID | 19318166 |
|---|---|
| Authors | Allen N Berger (Federal Reserve), Timothy H Hannan (Federal Reserve) |
| Year | 1998 |
| Volume | 80 |
| Issue | 3 |
| Pages | 454-465 |
| Publication date | 1998-08-01 |
| Open Access | No |
| Type | ARTICLE |
| Venue | The Review of Economics and Statistics (JOURNAL) |
| Journal identifiers | ISSN: 0034-6535 • E-ISSN: 1530-9142 |
| Publisher | MIT Press - Journals (PUBLISHER) |
| DOI | 10.1162/003465398557555 |
| OpenAlex | W2137271626 |
| Language | EN |
| Citations received | 28 |
| References cited | 20 |
Traditional concerns about concentration in product markets have centered on the social loss associated with the mispricing that occurs when market power is exercised. This paper focuses on a potentially greater loss from market power—a reduction in cost efficiency brought about by the lack of market discipline in concentrated markets. We employ data from the commercial banking industry, which produces very homogeneous products in multiple markets with differing degrees of market concentration. We find the estimated efficiency cost of concentration to be several times larger than the social loss from mispricing as traditionally measured by the welfare triangle
Business · Cost efficiency · Deadweight loss · Economics · Financial economics · Homogeneous · Market economy · Market efficiency · Market power · Microeconomics · Monetary economics · Product (mathematics) · QUIET · Social Welfare · Welfare · Banking stability, regulation, efficiency · Economic theories and models · Housing Market and Economics
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| Citations per year | 1.04 |
|---|---|
| Citation span | 1999 - 2025 (27) |
| Highly cited | No |