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Testing for Oligopoly and Oligopsony Power

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  • Azzam, Azzeddine M.
  • Pagoulatos, Emilio
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    Abstract

    This paper extends the conjectural approach in industrial organization to the analysis of imperfections in output and factor markets simultaneously. Starting from the specification of a production function, the econometric analysis is based on the formulation and estimation of a simultaneous equation model consisting of a production function, first order conditions associated with factor employment, and two conjectural elasticities to parametrize the industry's oligopoly and oligopsony equilibria. As an example, we provide an application to the U.S. meat packing industry. Our results suggest that the industry excercised market power in both the output (meat) market and the factor (live animals) market.

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    File URL: http://purl.umn.edu/115906
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    Bibliographic Info

    Paper provided by Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance in its series Working Papers with number 115906.

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    Date of creation: Sep 1989
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    Handle: RePEc:ags:rpspwp:115906

    Contact details of provider:
    Postal: Draper Hall, College of Food and Natural Resources, Amherst, MA 01003
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    Web page: http://www.umass.edu/ne165/
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    Related research

    Keywords: Industrial Organization;

    References

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    1. Schroeter, John R, 1988. "Estimating the Degree of Market Power in the Beef Packing Industry," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 158-62, February.
    2. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
    3. Cowling, Keith & Waterson, Michael, 1976. "Price-Cost Margins and Market Structure," Economica, London School of Economics and Political Science, vol. 43(171), pages 267-74, August.
    4. Gollop, Frank M. & Roberts, Mark J., 1979. "Firm interdependence in oligopolistic markets," Journal of Econometrics, Elsevier, vol. 10(3), pages 313-331, August.
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    Citations

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    Cited by:
    1. Ding, John Y. & Caswell, Julie A. & Rogers, Richard T., 1993. "Restructuring's Effect on Related and Unrelated Diversification Among Top Food Manufacturing Firms in the 1980s," Working Papers 116118, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    2. Wen, Hong & Haller, Lawrence E., 1994. "Price Determination in the Bottled Water Industry: A Case Study of Poland Spring," Working Papers 116165, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    3. Langan, Glenn E. & Cotterill, Ronald W., 1994. "Estimating Brand Level Demand Elasticities and Measuring Market Power for Regular Carbonated Soft Drinks," Working Papers 116168, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    4. Durham, Catherine A., 1991. "The Empirical Analysis of Oligopsony in Agricultural Markets: Residual Supply Estimation in California's Processing Tomato Market," Research Reports 25200, University of Connecticut, Food Marketing Policy Center.
    5. Caswell, Julie A. & Kleinschmit, Jaana K., 1993. "Economic Criteria for Settling Federalism Disputes with an Application to Food Safety Regulation," Working Papers 116114, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    6. Ding, John Y. & Caswell, Julie A., 1993. "Relatedness and Performance: A Reexamination of the Diversification-Performance Link," Working Papers 116116, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    7. Cotterill, Ronald W. & Pinkerton, Don C., 1993. "Motives for Mergers in Food Manufacturing," Working Papers 116111, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    8. Cotterill, Ronald W. & Salih, Hachim M., 1992. "Testing For Risk Premiums In The Wheat-Flour Subsector," Working Papers 116109, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    9. Steahr, Thomas E. & Roberts, Tanya, 1993. "Microbial Foodborne Disease: Hospitalizations, Medical Costs and Potential Demand for Safer Food," Working Papers 116110, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    10. Bhuyan, Sanjib & Cotterill, Ronald W., 1994. "Countervailing Power and Seller Performance in U.S. Food and Tobacco Manufacturing Industries," Working Papers 116163, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.

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