In Britain, many of the industries that supply farmers are oligopolistic. The five largest firms sell 80 percent of the fertilizer and 90 percent of tractors. McCorriston (1993) finds that oligopoly prices are higher than Cournot prices in these two factor markets. Measuring the welfare loss as the deadweight loss compared to the social optimum, McCorriston estimates that the loss is 2 percent in the fertilizer industry and 0.6 percent in the tractor market. When he uses Posner's measure of welfare (Example 5.7), which includes both deadweight loss and oligopoly profits, welfare is reduced by 25 percent in the U.K. fertilizer market and 9 percent in the U.K. tractor market.
