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Measuring Oligopsony Power of UK Salmon Retailers

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  • Fofana, Abdulai
  • Jaffry, Shabbar

Abstract

A significant increase of concentration in the UK salmon retail subsector has heightened concerns about retail firms’ ability to exercise market power in the purchase of supplies (oligopsony power). To assess the extent to which retail firms have exercised oligopsony power, we develop a dynamic error correction translog profit function to model the behaviour of retailers in the input market for smoke, fillet and whole salmon. Initial estimates indicated violations of monotonicity and convexity conditions as implied by economic theory. In order to ameliorate the problem, a Bayesian technique was used to impose inequality restrictions to correct the anomaly. The final estimated indices of market power in the models were low and statistically significant but sufficiently closer to the perfect competition benchmark to indicate that retailers as a whole behaved competitively during much of the period covered by this study.

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Bibliographic Info

Paper provided by Scottish Agricultural College, Land Economy Research Group in its series Working Papers with number 61116.

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Date of creation: 2008
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Handle: RePEc:ags:saclwp:61116

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Web page: http://www.sac.ac.uk/research/lee/
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Related research

Keywords: Salmon; market power; error correction model; translog profit function; Food Security and Poverty; JEL-I; JEL-J;

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Cited by:
  1. Mujawamariya, Gaudiose & Burger, Kees & D'Haese, Marijke F.C., 2012. "Behaviour and performance of traders in the gum arabic supply chain in Senegal: Investigating oligopsonistic myths," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126236, International Association of Agricultural Economists.

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