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Concentration In Beef Packing and Slaughter Cattle Pricing

  • Love, H. Alan
  • Capps, Oral, Jr.
  • Williams, Gary W.

Using unique data from a pre-mandatory price-reporting period we empirically investigate the effects of beef packer concentration and size efficiencies, packer procurement and pricing methods, and other market variables and quality characteristics on the prices paid by packers for slaughter cattle. We find that packers pay less for fed cattle in more concentrated regions. However, we find that concentration is only one of numerous market factors determining fed-cattle prices and is less important than many. Quality variables controlled by sellers, such as cattle type, are more important in determining the price paid by packers than packer concentration, size economies, procurement methods, or other variables outside seller control. This analysis then offers a set of hypotheses to consider in analyses of the beef packing industry from the post-mandatory price-reporting period.

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File URL: http://purl.umn.edu/139063
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Article provided by Food Distribution Research Society in its journal Journal of Food Distribution Research.

Volume (Year): 41 (2010)
Issue (Month): 3 (November)
Pages:

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Handle: RePEc:ags:jlofdr:139063
Contact details of provider: Web page: http://fdrs.ag.utk.edu/
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  1. Love, H. Alan & Burton, Diana M., 1999. "A Strategic Rationale For Captive Supplies," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(01), July.
  2. Azzam, Azzeddine M. & Schroeter, John R., 1995. "The Tradeoff Between Oligopsony Power and Cost Efficiency in Horizontal Consolidation: An Example from Beef Packing," Staff General Research Papers 5062, Iowa State University, Department of Economics.
  3. Bresnahan, Timothy F & Reiss, Peter C, 1991. "Entry and Competition in Concentrated Markets," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 977-1009, October.
  4. Tian Xia & Richard J. Sexton, 2004. "The Competitive Implications of Top-of-the-Market and Related Contract-Pricing Clauses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 124-138.
  5. 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, vol. 22(01), July.
  6. Brown, James N & Rosen, Harvey S, 1982. "On the Estimation of Structural Hedonic Price Models," Econometrica, Econometric Society, vol. 50(3), pages 765-68, May.
  7. Schroeter, John R. & Azzam, Azzeddine M., 1991. "Implications of Increased Regional Concentration and Oligopsonistic Coordination in the Beef Packing Industry," Staff General Research Papers 11109, Iowa State University, Department of Economics.
  8. Azzeddine Azzam, 1996. "Testing the Monopsony-Inefficiency Incentive for Backward Integration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 585-590.
  9. Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-75, November.
  10. Lucas, Robert E B, 1975. "Hedonic Price Functions," Economic Inquiry, Western Economic Association International, vol. 13(2), pages 157-78, June.
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