(Mis)Allocation, Market Power, and Global Oil Extraction
Abstract
© 2019 American Economic Association. All Rights Reserved. We propose an approach
to measuring the misallocation of production in a market that compares actual industry
cost curves to undistorted (counterfactual) supply curves. As compared to traditional,
TFPR- based, misallocation measures, this approach leverages cost data, such that
results are readily mapped to welfare metrics. As an application, we analyze global
crude oil extraction and quantify the extent of misallocation therein, together with
the proportion attributable to market power. From 1970 to 2014, we find substantial
misallocation, in the order of US$744 billion, 14.1 percent to 21.9 percent of which
is attributable to market power.
Type
Journal articlePermalink
https://hdl.handle.net/10161/21601Published Version (Please cite this version)
10.1257/aer.20171438Publication Info
Asker, J; Collard-Wexler, A; & De Loecker, J (2019). (Mis)Allocation, Market Power, and Global Oil Extraction. American Economic Review, 109(4). pp. 1568-1615. 10.1257/aer.20171438. Retrieved from https://hdl.handle.net/10161/21601.This is constructed from limited available data and may be imprecise. To cite this
article, please review & use the official citation provided by the journal.
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Allan Collard-Wexler
Professor of Economics

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