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Market power on the edge? An analysis of the German and Hungarian hog markets

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Author Info

  • Bakucs, Lajos Zoltan
  • Ferto, Imre
  • Hockmann, Heinrich
  • Perekhozhuk, Oleksandr

Abstract

A structural market model is estimated to analyse the impact of market power on resource allocation in the German and Hungarian pork markets. The regression analyses suggest that market power exists, although on a relatively low level. Moreover, the estimates show that processors might pursue Cournot strategies. In addition, we observe that the market power of processors in the German hog sector is decreasing, while in the Hungarian sector it is increasing. These results are consistent with the structural developments in pork production and pork processing. Ein strukturelles Marktmodell wird geschätzt, um zu beurteilen, ob die Ausübung von Marktmacht die Ressourcenallokation auf den deutschen und ungarischen Schweinefleischmärkten verzerrt. Die Regressionsanalysen zeigen, dass zwar nicht von perfekten Märkten ausgegangen werden kann, die durch die Ausübung von Marktmacht bedingten Verzerrungen allerdings als gering anzusehen sind. Die Schätzungen implizieren, dass die Fleischverarbeiter sich konsistent mit der Verfolgung von Cournot-Strategien verhalten. Zusätzlich deuten die Schätzungen darauf hin, dass die Marktmacht der Verarbeiter im deutschen Schweinesektor abnehmend ist, während sie sich im ungarischen Sektor erhöht. Diese Resultate stimmen mit den strukturellen Entwicklungen in der Schweinefleischproduktion und in der Schweinefleischverarbeitung überein.

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Bibliographic Info

Article provided by Humboldt-Universitaet zu Berlin, Department for Agricultural Economics in its journal German Journal of Agricultural Economics.

Volume (Year): 58 (2009)
Issue (Month): 8 ()
Pages:

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Handle: RePEc:ags:gjagec:134886

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Keywords: market power; Germany; Hungary; pork chain; Marktmacht; Deutschland; Ungarn; Schweinefleischkette; Agribusiness; Industrial Organization; Livestock Production/Industries;

References

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  1. Corts, Kenneth S., 1998. "Conduct parameters and the measurement of market power," Journal of Econometrics, Elsevier, vol. 88(2), pages 227-250, November.
  2. T. A. Lloyd & S. McCorriston & C. W. Morgan & A. J. Rayner, 2006. "Food scares, market power and price transmission: the UK BSE crisis," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(2), pages 119-147, June.
  3. Park, Timothy A. & Weliwita, Ananda, 1996. "Competitive Behavior In The Food Retailing Industry," Faculty Series 16680, University of Georgia, Department of Agricultural and Applied Economics.
  4. Shen, Edward Z. & Perloff, Jeffrey M., 2001. "Maximum entropy and Bayesian approaches to the ratio problem," Journal of Econometrics, Elsevier, vol. 104(2), pages 289-313, September.
  5. Lindh, T., 1988. "The Inconsistency Of Consistent Conjectures: Coming Back To Cournot," Papers 1988d, Uppsala - Working Paper Series.
  6. Jochen Meyer & Stephan Cramon-Taubadel, 2004. "Asymmetric Price Transmission: A Survey," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(3), pages 581-611.
  7. Richard Tiffin & P. J. Dawson, 2000. "Structural breaks, cointegration and the farm-retail price spread for lamb," Applied Economics, Taylor & Francis Journals, vol. 32(10), pages 1281-1286.
  8. Paul W. Dobson & Michael Waterson & Stephen W. Davies, 2003. "The Patterns and Implications of Increasing Concentration in European Food Retailing," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 111-125.
  9. Habtu Tadesse Weldegebriel, 2004. "Imperfect Price Transmission: Is Market Power Really to Blame?," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(1), pages 101-114.
  10. Bresnahan, Timothy F, 1981. "Duopoly Models with Consistent Conjectures," American Economic Review, American Economic Association, vol. 71(5), pages 934-45, December.
  11. Barry K. Goodwin & Matthew T. Holt, 1999. "Price Transmission and Asymmetric Adjustment in the U.S. Beef Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 630-637.
  12. Steve McCorriston, 2002. "Why should imperfect competition matter to agricultural economists?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(3), pages 349-371, July.
  13. Timothy Park & Ananda Weliwita, 1999. "Competitive Behavior in the U.S. Food Retailing Industry," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(1), pages 45-55, 03.
  14. Lajos Zoltán Bakucs & Imre Fert�, 2005. "Marketing margins and price transmission on the Hungarian pork meat market," Agribusiness, John Wiley & Sons, Ltd., vol. 21(2), pages 273-286.
  15. Andrew F. Daughety, 1985. "Reconsidering Cournot: The Cournot Equilibrium is Consistent," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 368-379, Autumn.
  16. Muth, Mary K. & Wohlgenant, Michael K., 1999. "Measuring The Degree Of Oligopsony Power In The Beef Packing Industry In The Absence Of Marketing Input Quantity Data," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(02), December.
  17. von Cramon-Taubadel, Stephan, 1998. "Estimating Asymmetric Price Transmission with the Error Correction Representation: An application to the German Pork Market," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(1), pages 1-18.
  18. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
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