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Measuring the Degree of Oligopsony Power in the Brazilian Raw Milk Market

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  • Scalco, Paulo Roberto
  • Braga, Marcelo Jose

Abstract

This study sets out to measure the degree of oligopsony power in the Brazilian raw milk market. The analysis was undertaken in fifteen producing regions between January 1997 and December 2011. The results led to the authors rejecting the monopsony hypothesis. In six regions, the hypothesis of perfect competition was not rejected. In the other nine, the conduct parameter estimates were very close to zero. These results contradict both the empirical literature and the reports produced by Parliamentary Inquiries in the early 2000s, which found suspicions of market power in dairies in several Brazilian states. Although the dairy industry concentrates on the marketing of Brazilian raw milk, the survey results indicate that the behavior of firms is similar to that of a perfect competition market model.

Suggested Citation

  • Scalco, Paulo Roberto & Braga, Marcelo Jose, 2014. "Measuring the Degree of Oligopsony Power in the Brazilian Raw Milk Market," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 17(2), pages 1-20, May.
    • Handle: RePEc:ags:ifaamr:167902
    DOI: 10.22004/ag.econ.167902
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    References listed on IDEAS

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    Cited by:

    1. Čechura, Lukáš & Žáková Kroupová, Zdeňka & Hockmann, H., 2015. "Market Power in the European Dairy Industry," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 7(4), pages 1-9, December.
    2. Grau, Aaron Stephan Alexander & Hockmann, Heinrich, 2017. "Estimating oligopsony power on two vertically integrated markets," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261277, European Association of Agricultural Economists.
    3. Cechura, Lukas & Žáková Kroupová, Zdenka & Hockmann, Heinrich, 2015. "Market power in the European dairy industry," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 7(4), pages 39-47.
    4. Cechur, Lukas & Hockmann, Heinrich & Levkovych, Inna, 2015. "Do the EU food processors abuse Oligopsony market power?," 2015 Conference, August 9-14, 2015, Milan, Italy 212043, International Association of Agricultural Economists.
    5. Valtiala, Juho P. & Rezitis, Anthony N., 2017. "Examining Market Power in the Finnish Dairy Chain," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261419, European Association of Agricultural Economists.

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