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Price distortions on the Hungarian raw milk market

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  • Voneki, Eva
  • Hockmann, Heinrich

Abstract

The paper attempts to identify the impact of market power in the Hungarian milk chain. Since the conventional conjectural variation approach provides suspicious results the incentives to collude are discussed in an alternative framework. It is argued that the high degree of market transparency, the high frequency of interaction, the low number of large firms which could actually influence market prices, the threat of severe sanctions due to the under-utilization of processing capacities as well as opportunistic behavior make collusive behavior more likely than competitive behavior. The empirical evidence for the period 1998 to 2006 supports this view.

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Bibliographic Info

Paper provided by International Association of Agricultural Economists in its series 2009 Conference, August 16-22, 2009, Beijing, China with number 51673.

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Date of creation: Jun 2009
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Handle: RePEc:ags:iaae09:51673

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Related research

Keywords: market power; dairy processing; Hungary; Industrial Organization; Q11; Q13;

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  1. 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.
  2. 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.
  3. Corts, Kenneth S., 1998. "Conduct parameters and the measurement of market power," Journal of Econometrics, Elsevier, vol. 88(2), pages 227-250, November.
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