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Potential HPAI Shocks and Welfare Implications of Market Power in the U.S. Broiler Industry

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  • Liang, Jing
  • Fabiosa, Jacinto F.
  • Jensen, Helen H.
  • Miller, Gay Y.

Abstract

Recent outbreaks of highly pathogenic avian influenza (HPAI) in Asia, Europe, and Africa have caused severe impacts on the broiler sector through production losses, trade restrictions and negative shocks to demand. This study develops a multimarket econometric model that is the basis of simulations to assess the spread and market implications of a potential HPAI outbreak in U.S. broiler industry. It takes into account market power that might exist within the livestock and meat sectors and endogenizes the optimal production condition on the model system. The results imply that the HPAI shocks affect prices at different marketing levels unequally and change the price margins along the supply chain with the existence of market power. The change in the price margin, although statistically significant, is quite small in absolute value.

Suggested Citation

  • Liang, Jing & Fabiosa, Jacinto F. & Jensen, Helen H. & Miller, Gay Y., 2010. "Potential HPAI Shocks and Welfare Implications of Market Power in the U.S. Broiler Industry," ISU General Staff Papers 201001010800001021, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:201001010800001021
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    References listed on IDEAS

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    1. Cotterill, Ronald W., 1994. "Scanner Data: New Opportunities For Demand And Competitive Strategy Analysis," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 23(2), pages 1-15, October.
    2. Helen H. Jensen & Stanley R. Johnson & Seung Houll Shin & Karl D. Skold, 1989. "CARD Livestock Model Documentation: Poultry," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 88-tr3, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    3. Stephen R. Koontz & Philip Garcia & Michael A. Hudson, 1993. "Meatpacker Conduct in Fed Cattle Pricing: An Investigation of Oligopsony Power," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 537-548.
    4. Kwamena Quagrainie & James Unterschultz & Michele Veeman & Scott Jeffrey, 2003. "Testing for Processor Market Power in the Markets for Cattle and Hogs in Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 51(3), pages 397-411, November.
    5. Cotterill, Ronald W., 1994. "Scanner Data: New Opportunities for Demand and Competitive Strategy Analysis," Agricultural and Resource Economics Review, Cambridge University Press, vol. 23(2), pages 125-139, October.
    6. Ana I. Sanjuán & P. J. Dawson, 2003. "Price transmission, BSE and structural breaks in the UK meat sector," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 30(2), pages 155-172, June.
    7. Key, Nigel D. & MacDonald, James M., 2008. "Local Monopsony Power in the Market for Broilers - Evidence from a Farm Survey," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6073, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Cited by:

    1. Sara Rodríguez & Lluis Plà & Javier Faulin, 2014. "New opportunities in operations research to improve pork supply chain efficiency," Annals of Operations Research, Springer, vol. 219(1), pages 5-23, August.

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