IDEAS home Printed from https://ideas.repec.org/a/url/izvest/v22y2021i3p6-27.html
   My bibliography  Save this article

Measuring oligopsonistic market power in the Kazakh grain processing industry: Empirical evidence from the General Identification Method

Author

Listed:
  • Giorgi Chezhia

    (Leibniz Institute of Agricultural Development in Transition Economies, Halle (Saale), Germany)

  • Oleksandr Perekhozhuk

    (Leibniz Institute of Agricultural Development in Transition Economies, Halle (Saale), Germany)

  • Thomas Glauben

    (Leibniz Institute of Agricultural Development in Transition Economies, Martin-Luther-Universitat Halle-Wittenberg, Halle (Saale), Germany)

Abstract

The issues of market structure, pricing behaviour and market power are of great interest to research, industry and society. In recent years, Kazakhstan has become one of the largest wheat producers and exporters on international markets. This paper provides empirical evidence for measuring and identifying oligopsonistic market power in the Kazakh grain processing industry based on the well-known methodological approach in the New Empirical Industrial Organization (NEIO) literature – the General Identification Method (GIM). Using a regional-level panel data set covering the period 2000–2011, two estimation methods, the Nonlinear Three Stage Least Squares (N3SLS) and the Generalized Method of Moments (GMM), were applied to estimate a structural model consisting of a nonlinear system of simultaneous equations. The main result of this empirical analysis is that the market behaviour of Kazakh grain processors in the wheat purchase market is rather competitive. The tests of the market power parameter imply that there was no exercise of oligopsony power. The market power parameter obtained was statistically close to zero, suggesting that grain processors do not have sufficient oligopsonistic market power to influence purchase prices in the Kazakh wheat market during the study period.

Suggested Citation

  • Giorgi Chezhia & Oleksandr Perekhozhuk & Thomas Glauben, 2021. "Measuring oligopsonistic market power in the Kazakh grain processing industry: Empirical evidence from the General Identification Method," Journal of New Economy, Ural State University of Economics, vol. 22(3), pages 6-27, October.
    • Handle: RePEc:url:izvest:v:22:y:2021:i:3:p:6-27
    DOI: 10.29141/2658-5081-2021-22-3-1
    as

    Download full text from publisher

    File URL: http://jne.usue.ru/images/download/92/1.pdf
    Download Restriction: no
    File URL: http://jne.usue.ru/en/issues-2021/1024
    Download Restriction: no
    File URL: https://libkey.io/10.29141/2658-5081-2021-22-3-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. repec:zbw:iamost:296499 is not listed on IDEAS
    2. David E. Buschena & Jeffrey M. Perloff, 1991. "The Creation of Dominant Firm Market Power in the Coconut Oil Export Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1000-1008.
    3. A. M. Azzam & E. Pagoulatos, 1990. "Testing Oligopolistic And Oligopsonistic Behaviour: An Application To The Us Meat‐Packing Industry," Journal of Agricultural Economics, Wiley Blackwell, vol. 41(3), pages 362-370, September.
    4. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
    5. Lajos Zoltán Bakucs & Imre FertŠ& Heinrich Hockmann & Oleksandr Perekhozhuk, 2010. "Estimating Oligopsony Power in the Hungarian Market for Slaughter Hogs," Eastern European Economics, Taylor & Francis Journals, vol. 48(1), pages 64-78, January.
    6. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
    7. Sven Anders, 2008. "Imperfect Competition in German Food Retailing: Evidence from State Level Data," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 36(4), pages 441-454, December.
    8. Chezhia, Giorgi, 2019. "Oligopsony power in the Kazakh grain supply chain," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 94, number 94.
    9. Azzeddine M. Azzam, 1997. "Measuring Market Power and Cost‐efficiency Effects of Industrial Concentration," Journal of Industrial Economics, Wiley Blackwell, vol. 45(4), pages 377-386, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Perekhozhuk, Oleksandr & Chezhia, Giorgi & Glauben, Thomas, 2021. "Measuring Oligopsony Market Power in Kazakh Grain-Processing Industry: Converging Evidence from Two Structural Approaches," 2021 Conference, August 17-31, 2021, Virtual 315345, International Association of Agricultural Economists.
    2. Chezhia, Giorgi & Perekhozhuk, Oleksandr & Glauben, Thomas, 2021. "Measuring oligopsonistic power in the Kazakh grain processing industry: Empirical evidence from the General Identification Method," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 22(3), pages 6-27.
    3. Ian Sheldon & Richard Sperling, 2003. "Estimating the Extent of Imperfect Competition in the Food Industry: What Have We Learned?," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 89-109, March.
    4. Soregaroli, Claudio & Sckokai, Paolo & Moro, Daniele, 2011. "Agricultural policy modelling under imperfect competition," Journal of Policy Modeling, Elsevier, vol. 33(2), pages 195-212, March.
    5. Ronchi, Loraine, 2006. "Fairtrade and market failures in agricultural commodity markets," Policy Research Working Paper Series 4011, The World Bank.
    6. Perekhozhuk, Oleksandr, 2013. "Moderne Konzepte zur Analyse der Preisbildung auf dem Faktormarkt mit unvollständigem Wettbewerb," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 4, pages 99-106.
    7. Oleksandr Perekhozhuk, 2013. "Modern Concepts for Pricing Analysis in Imperfect Competition Production Factor Market," Oblik i finansi, Institute of Accounting and Finance, issue 4, pages 99-106, December.
    8. Perekhozhuk Oleksandr & Hockmann Heinrich & Fertő Imre & Bakucs Lajos Zoltán, 2013. "Identification of Market Power in the Hungarian Dairy Industry: A Plant-Level Analysis," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 11(1), pages 1-13, January.
    9. Perekhozhuk, Oleksandr, 2007. "Marktstruktur und Preisbildung auf dem ukrainischen Markt für Rohmilch," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 41, number 92322.
    10. Alessandro Bonanno & Carlo Russo & Luisa Menapace, 2018. "Market power and bargaining in agrifood markets: A review of emerging topics and tools," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 6-23, December.
    11. Maximilian Koppenberg & Stefan Hirsch, 2022. "Output market power and firm characteristics in dairy processing: Evidence from three EU countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(2), pages 490-517, June.
    12. Chanjin Chung & Seongjin Park & Jungmin Lee, 2018. "Estimating bilateral market power of processors and retailers in the U.S. beef industry," Agribusiness, John Wiley & Sons, Ltd., vol. 34(4), pages 771-792, October.
    13. Klaus Salhofer & Christoph Tribl & Franz Sinabell, 2012. "Market power in Austrian food retailing: the case of milk products," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 39(1), pages 109-122, February.
    14. Azzeddine Azzam & David Rosenbaum, 2001. "Differential efficiency, market structure and price," Applied Economics, Taylor & Francis Journals, vol. 33(10), pages 1351-1357.
    15. Sckokai, Paolo & Soregaroli, Claudio & Moro, Daniele, 2009. "Estimating Market Power By Retailers In The Italian Parmigiano Reggiano And Grana Padano Cheese Market," 2009 Conference, August 16-22, 2009, Beijing, China 51425, International Association of Agricultural Economists.
    16. Suzuki, Nobuhiro & Kaiser, Harry M. & Lenz, John E. & Forker, Olan D., 1993. "Evaluating U.S. Generic Milk Advertising Effectiveness Using An Imperfect Competition Model," Research Bulletins 123015, Cornell University, Department of Applied Economics and Management.
    17. Lass, Daniel A. & Lavoie, Nathalie & Fetter, T. Robert, 2005. "Market Power in Direct Marketing of Fresh Produce: Community Supported Agriculture Farms," Working Paper Series 14514, University of Massachusetts, Amherst, Department of Resource Economics.
    18. Spielman, David J. & Kolady, Deepthi E. & Cavalieri, Anthony & Rao, N. Chandrasekhara, 2014. "The seed and agricultural biotechnology industries in India: An analysis of industry structure, competition, and policy options," Food Policy, Elsevier, vol. 45(C), pages 88-100.
    19. Inbae Ji & Chanjin Chung & Jungmin Lee, 2017. "Measuring Oligopsony Power in the U.S. Cattle Procurement Market: Packer Concentration, Cattle Cycle, and Seasonality," Agribusiness, John Wiley & Sons, Ltd., vol. 33(1), pages 16-29, January.
    20. Dimitrios Panagiotou & Athanassios Stavrakoudis, 2017. "A Stochastic Production Frontier Estimator of the Degree of Oligopsony Power in the U.S. Cattle Industry," Journal of Industry, Competition and Trade, Springer, vol. 17(1), pages 121-133, March.

    More about this item

    Keywords

    market power; oligopsony; grain processing industry; New Empirical Industrial Organization (NEIO); General Identification Method (GIM); Kazakhstan;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:url:izvest:v:22:y:2021:i:3:p:6-27. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Victor Blaginin (email available below). General contact details of provider: https://edirc.repec.org/data/usueeru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.