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A Review of Causes for and Consequences of Economic Concentration in the U.S. Meatpacking Industry

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  • Ward, Clement E.

Abstract

Clear and continuing changes in the structure of the U.S. meatpacking industry have significantly increased economic concentration since the mid-1970s. Concentration levels are among the highest of any industry in the United States, and well above levels generally considered to elicit non-competitive behavior and result in adverse economic performance, thereby triggering antitrust investigations and subsequent regulatory actions. Many agricultural economists and others deem this development paradoxical. While several civil antitrust lawsuits have been filed against the largest meatpacking firms, there have been no major antitrust decisions against those firms and there have been no significant federal government antitrust cases brought against the largest meatpacking firms over the period coincident with the period of major structural changes. The structural changes in the U.S. meatpacking industry raise a number of questions. What is the nature of the changes and what economic factors caused them? What evidence is there that economic behavior has shifted from competitive to non-competitive? What evidence is there that structural and behavioral changes have resulted in adverse economic performance? This paper reviews the available data and information pertaining to these questions and provides some insight into the answers. Structural changes are reviewed, along with discussion of one major causal factor for the changes. Then, numerous studies conducted over the past twenty years are reviewed, i.e., studies carried out at different times with alternative approaches and varying levels of data aggregation.

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  • 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 3, pages 1-28, January.
  • Handle: RePEc:ags:cafric:45696
    DOI: 10.22004/ag.econ.45696
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    Cited by:

    1. Bullock, J. Bruce, 2003. "Performance Evaluation Of The U.S. Hog Slaughter Industry," Working Papers 26044, University of Missouri Columbia, Department of Agricultural Economics.
    2. Blank, Steven C. & Saitone, Tina & Sexton, Richard & Kalotia, Kabir & Forero, Larry & Nader, Glenn, 2011. "Location and distance effects on western calf and yearling prices," 2011 Annual Meeting, June 29-July 1, 2011, Banff, Alberta,Canada 291744, Western Agricultural Economics Association.
    3. Chanjin Chung & Emílio Tostão, 2009. "Nonparametric Estimation of Oligopsony Power in First‐Price Auction," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(2), pages 318-333, June.
    4. MacDonald, James M. & Dong, Xiao & Fuglie, Keith O., 2023. "Concentration and Competition in U.S. Agribusiness," Economic Information Bulletin 337566, United States Department of Agriculture, Economic Research Service.
    5. Xia, Tian & Sancewich, Brian, 2012. "Retail Markets and Buyer Power in Agricultural Procurements," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124929, Agricultural and Applied Economics Association.
    6. Joshua G. Maples & James L. Mitchell & David P. Anderson & John D. Anderson & Christopher T. Bastian & Scott Brown & Stephen R. Koontz & Derrell S. Peel, 2022. "Potential beef cattle topics in the 2023 farm bill," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1261-1272, September.
    7. Blank, Steven C. & Saitone, Tina L. & Sexton, Richard J., 2016. "Calf and Yearling Prices in the Western United States: Spatial, Quality, and Temporal Factors in Satellite Video Auctions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(3), pages 1-23.
    8. Marsh, John M. & Brester, Gary W., 2004. "Wholesale-Retail Marketing Margin Behavior in the Beef and Pork Industries," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(1), pages 1-20, April.
    9. Brorsen B. Wade & Fain James R. & Maples Joshua G., 2018. "Alternative Policy Responses to Increased Use of Formula Pricing," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 16(1), pages 1-11, January.
    10. Jung Min Lee & Chanjin Chung, 2024. "Estimating Market Power Exertion in the U.S. Beef Packing Industry: An Illustration of Data Aggregation Bias Using Simulated Data," Sustainability, MDPI, vol. 16(9), pages 1-19, April.
    11. Tian Xia & John M. Crespi & Kevin C. Dhuyvetter, 2019. "Could packers manipulate spot markets by tying contracts to futures prices? And do they?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 67(1), pages 85-102, March.
    12. Tostao, Emilio & Chung, Chanjin & Brorsen, B. Wade, 2006. "Integrating the Structural Auction Approach and Traditional Measures of Market Power," 2006 Annual meeting, July 23-26, Long Beach, CA 21244, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Brester, Gary W. & Marsh, John M. & Atwood, Joseph A., 2009. "Evaluating the Farmer’s-Share-of-the-Retail-Dollar Statistic," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(2), pages 1-24, August.
    14. Blank, Steven C. & Saitone, Tina L. & Sexton, Richard J., 2014. "Seller-Offered Forward Contracts: An Additional Benefit to Cattle Producers from Satellite Video Auctions," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162323, Southern Agricultural Economics Association.
    15. Philip Watson & Jason Winfree, 2022. "Should we use antitrust policies on big agriculture?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1313-1326, September.
    16. Hornung, Jonathan T. & Ward, Clement E., 2005. "Positive Market Effects from a Meatpacking Plant Opening: Perceptions and Reality," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 6, pages 1-10, March.
    17. Jared G. Carlberg & Robert J. Hogan & Clement E. Ward, 2009. "Game theory application to Fed Cattle procurement in an experimental market," Agribusiness, John Wiley & Sons, Ltd., vol. 25(1), pages 56-69.

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