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Estimating Market Power and Pricing Conduct in a Product-Differentiated Oligopoly: The Case of the Domestic Spaghetti Sauce Industry

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  • Vickner, Steven S.
  • Davies, Stephen P.

Abstract

This paper develops a simultaneous-equations panel data econometric model to obtain point estimates of market power and pricing conduct in a representative product-differentiated, oligopolistic food market. The importance of this class of markets is recognized given its prevalence in the food and fiber system, especially for final consumer food products. The $1.3 billion domestic spaghetti sauce industry is featured. Although the results indicate firms exert limited market power, a portion of this power is derived from tacit price collusion. A higher degree of price collusion was found among brands within a market segment than between segments.

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  • Vickner, Steven S. & Davies, Stephen P., 1999. "Estimating Market Power and Pricing Conduct in a Product-Differentiated Oligopoly: The Case of the Domestic Spaghetti Sauce Industry," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 31(1), pages 1-13, April.
    • Handle: RePEc:cup:jagaec:v:31:y:1999:i:01:p:1-13_02
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    Cited by:

    1. Liang, Jing, 2010. "Three essays on food safety and foodborne illness," ISU General Staff Papers 201001010800002782, Iowa State University, Department of Economics.
    2. Brueckner, Jan K. & Luo, Dan, 2014. "Measuring strategic firm interaction in product-quality choices: The case of airline flight frequency," Economics of Transportation, Elsevier, vol. 3(1), pages 102-115.
    3. Maynard, Leigh J. & Saghaian, Sayed H. & Nickoloff, Megan, 2008. "Buyer and Seller Responses to an Adverse Food Safety Event: The Case of Frozen Salmon in Alberta," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 11(1), pages 1-20, February.
    4. Lavoie, Nathalie, 2001. "Price Discrimination In The Context Of Vertical Differentiation: A Modeling Approach For Wheat Exports," 2001 Annual meeting, August 5-8, Chicago, IL 20603, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Vickner, Steven S. & Davies, Stephen P. & Fulton, Joan R. & Vantreese, Valerie L., 2000. "Estimating Market Power And Pricing Conduct For Private-Label And National Brands In A Product-Differentiated Oligopoly: The Case Of A Frozen Vegetable Market," Journal of Food Distribution Research, Food Distribution Research Society, vol. 31(2), pages 1-13, July.
    6. Rodrigo Menon Simões Moita & Daniel Silv, 2014. "Follow The Leader: Competition In The Auto Financing Sector," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41st Brazilian Economics Meeting] 136, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    7. Junko Kinoshita & Nobuhiro Suzuki & Harry M. Kaiser, 2002. "Explaining pricing conduct in a product-differentiated oligopolistic market: An empirical application of a price conjectural variations model," Agribusiness, John Wiley & Sons, Ltd., vol. 18(4), pages 427-436.

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