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Oligopsony Power in the Ukrainian Milk Processing Industry: Evidence from the Regional Markets for Raw Milk

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  • Perekhozhuk, Oleksandr
  • Grings, Michael
  • Glauben, Thomas

Abstract

Most of the studies based on the New Empirical Industrial Organization (NEIO) approach use the industry data to estimate the degree of market power at the national level. Yet, only a few empirical studies presented the results that measure the degree of market power at the regional level and found the existence of market power in the regional markets. While the fact is that there is an extensive evidence for the existence of potential oligopsony market power in the Ukrainian milk processing industry (price cartels and geographic market sharing among milk processing enterprises, interference of the state authorities, higher concentration on regional markets), the estimation results of the market structure model at the national level did not produce any evidence suggesting the exercise of oligopsony power (the estimated parameter of oligopsony power is close to zero and statistically insignificant). The objective of this study is to estimate the degree of oligopsony power in the regional market for raw milk. The estimation results of the market structure model at the regional level indicate the existence of oligopsony power in nine out of the twenty three regions of Ukraine.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16991.

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Date of creation: 11 Jun 2009
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Handle: RePEc:pra:mprapa:16991

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Keywords: New Empirical Industrial Organization (NEIO); Oligopsony Power; Ukraine;

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  1. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, Elsevier, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier.
  2. Koontz, Stephen R. & Garcia, Philip, 1997. "Meat-Packer Conduct In Fed Cattle Pricing: Multiple-Market Oligopsony Power," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, Western Agricultural Economics Association, vol. 22(01), July.
  3. Lau, Lawrence J., 1982. "On identifying the degree of competitiveness from industry price and output data," Economics Letters, Elsevier, Elsevier, vol. 10(1-2), pages 93-99.
  4. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, Elsevier, vol. 10(1-2), pages 87-92.
  5. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
  6. Perekhozhuk, Oleksandr, 2007. "Marktstruktur und Preisbildung auf dem ukrainischen Markt für Rohmilch," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 41, number 92322.
  7. Wohlgenant, Michael K., 2001. "Marketing margins: Empirical analysis," Handbook of Agricultural Economics, Elsevier, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 16, pages 933-970 Elsevier.
  8. Sexton, Richard J. & Lavoie, Nathalie, 2001. "Food processing and distribution: An industrial organization approach," Handbook of Agricultural Economics, Elsevier, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 15, pages 863-932 Elsevier.
  9. Weliwita, Ananda & Azzam, Azzeddine M., 1996. "Identifying Implicit Collusion Under Declining Output Demand," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, Western Agricultural Economics Association, vol. 21(02), December.
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Cited by:
  1. Scalco, Paulo Roberto & Braga, Marcelo Jose, 2014. "Measuring the Degree of Oligoposony Power in the Brazilian Raw Milk Market," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), International Food and Agribusiness Management Association (IAMA), vol. 17(2).
  2. 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, International Association of Agricultural Economists 126236, International Association of Agricultural Economists.

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