Market Power in the U.S. Beef Packing Industry

This case study is motivated by recent developments in the U.S. beef packing industry involving allegations of an illegal exercise of buyer and seller market power by the four largest beef packers in the country in the markets for fed cattle and beef products, respectively. In 2019, fed cattle producers and beef buyers filed class action antitrust lawsuits against these companies alleging that they engaged in an unlawful conspiracy with the purpose of decreasing fed cattle prices and increasing wholesale and retail prices of beef as early as January 2015 and thus violated Section 1 of the Sherman Act. The case study focuses on applications of economic models that may explain conduct and performance of the beef packing industry using the perspectives of plaintiffs and defendants in the on-going cattle and beef antitrust litigation. The case study also introduces a basic empirical analysis of beef production, beef values, and marketing margins in the beef supply chain based on publicly available data reported by the U.S. Department of Agriculture. The intended audiences are undergraduate and graduate students, as well as extension and outreach communities. The teaching note1 summarizes student learning objectives and teaching strategies, and also includes multiple-choice questions, as well as suggested answers and guidance to analytical, discussion, and multiple-choice questions.(This abstract was borrowed from another version of this item.)