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Measuring Market Power in Multi-Product Oligopolies: The U.S. Meat Industry

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Author Info
Schroeter, John R.
Azzam, Azzeddine

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Abstract

This paper develops and estimates an economic model for measuring market power in a quantity-setting oligopoly engaged in the joint production of demand-related goods. The model, which allows for firms' conjectures about both same and cross-market responses to own output variation, is applied to the U.S. meat (beef and pork) industry. The hypothesis that the industry's equilibrium reflects price taking behaviour is rejected. The hypothesis of no cross effects cannot be rejected. Roughly half of the farm-to-retail price spreads for beef and pork appear to be attributable to market power.

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Publisher Info
Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 11112.

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Date of creation: 04 Dec 2003
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Publication status: Published in Applied Economics, October 1990, Vol. 22, No. 10, pp. 1365-1376.
Handle: RePEc:isu:genres:11112

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L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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  1. Muth, Mary K. & Wohlgenant, Michael K., 1998. "A Model Of Imperfect Competition Using Marginal Input And Output Prices: Application To The Beef Packing Industry," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20853, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  2. Lynn Hunnicutt & David Aadland, 2002. "Market Power with Dynamic Invertory Constraints: The Bias in Standard Measures," Working Papers 2002-15, Utah State University, Department of Economics. [Downloadable!]
    Other versions:
  3. Requillart, Vincent & Simioni, Michel & Varela Irimia, Xose Luis, 2008. "Imperfect competition in the fresh tomato industry," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44279, European Association of Agricultural Economists. [Downloadable!]
    Other versions:
  4. Lopez, Rigoberto A. & Azzam, Azzeddine M. & Liron-Espana, Carmen, 2001. "Market Power and/or Efficiency: An Application to U.S. Food Processing," Research Reports 25160, University of Connecticut, Food Marketing Policy Center. [Downloadable!]
  5. Brahim Bouras, 2007. "Market and Welfare Effects of Collusion with Reference to Multi-Product Food Oligopoly and Oligopsony," Journal of Agricultural & Food Industrial Organization, Berkeley Electronic Press, vol. 5(1). [Downloadable!]
  6. Sandra Rodríuez Piñeros & David K. Lewis, 2005. "Estimating the Imperfection in Sawtimber markets: a case study for the South Pacific Region, Colombia," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 63, pages 231-260, Julio-Dic. [Downloadable!]
  7. Ward, Clement E., 2002. "A Review of Causes for and Consequences of Economic Concentration in the U.S. Meatpacking Industry," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 03. [Downloadable!]
  8. Deodhar, Satish Y. & Fletcher, Stanley M., 1998. "Degree Of Competition In The U.S. Peanut Butter Industry: A Dynamic Error Correction Approach," Faculty Series 16725, University of Georgia, Department of Agricultural and Applied Economics. [Downloadable!]
  9. Burroughs, Rick & Harper, Deborah, 2002. "An Analysis of Profits within the Canadian Food Processing Sector," Agriculture and Rural Working Paper Series 28018, Statistics Canada. [Downloadable!]
  10. Nilsson, Tomas & Foster, Ken, 2005. "Certification of Pork Products," 2005 Annual meeting, July 24-27, Providence, RI 19350, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  11. Steiner, Bodo, 2007. "Formal beef alliances and alignment challenges: issues in contracting, pricing and quality," Project Report Series 7709, University of Alberta, Department of Rural Economy. [Downloadable!]
  12. Sexton, Richard J., 1993. "Noncooperative Game Theory: A Review with Potential Applications to Agricultural Markets," Research Reports 25183, University of Connecticut, Food Marketing Policy Center. [Downloadable!]
  13. Xia, Yin & Buccola, Steven, 2000. "Technological Performance In Meat Processing And Implications For Policy," 2000 Annual meeting, July 30-August 2, Tampa, FL 21862, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  14. Rigoberto Lopez & Azzeddine Azzam & Carmen Lirón-España, 2002. "Market Power and/or Efficiency: A Structural Approach," Review of Industrial Organization, Springer, vol. 20(2), pages 115-126, March. [Downloadable!] (restricted)
  15. Crespi, John M. & Xia, Tian & Jones, Rodney, 2008. "Competition, Bargaining Power, and the Cattle Cycle," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6263, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  16. Hunnicutt, Lynn & Bailey, Deevon & Crook, Michelle, 2002. "Measuring Market Power With Variables Other Than Price," 2002 Annual meeting, July 28-31, Long Beach, CA 19799, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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