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Estimating Market Power And Pricing Conduct In A Product-Differentiated Oligopoly: The Case Of The Domestic Spaghetti Sauce Industry

  • Vickner, Steven S.
  • Davies, Stephen P.

This paper develops a simultaneous-equations panel data econometric model to obtain point estimates of market power and pricing conduct in a representative product-differentiated, oligopolistic food market. The importance of this class of markets is recognized given its prevalence in the food and fiber system, especially for final consumer food products. The $1.3 billion domestic spaghetti sauce industry is featured. Although the results indicate firms exert limited market power, a portion of this power is derived from tacit price collusion. A higher degree of price collusion was found among brands within a market segment than between segments.

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File URL: http://purl.umn.edu/15137
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Article provided by Southern Agricultural Economics Association in its journal Journal of Agricultural and Applied Economics.

Volume (Year): 31 (1999)
Issue (Month): 01 (April)
Pages:

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Handle: RePEc:ags:joaaec:15137
Contact details of provider: Web page: http://www.saea.org/jaae/jaae.htm

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  1. Shapiro, Carl, 1989. "Theories of oligopoly behavior," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 6, pages 329-414 Elsevier.
  2. Steven S. Vickner & Stephen P. Davies, 1998. "Comment: on the estimation of simultaneous-equations error-components models with an application to a model of developing country foreign trade," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(6), pages 671-671.
  3. Schroeter, John R., 1988. "Estimating the Degree of Market Power in the Beef Packing Industry," Staff General Research Papers 11114, Iowa State University, Department of Economics.
  4. Baltagi, Badi H., 1981. "Simultaneous equations with error components," Journal of Econometrics, Elsevier, vol. 17(2), pages 189-200, November.
  5. repec:cup:cbooks:9780521305525 is not listed on IDEAS
  6. repec:cup:cbooks:9780521315647 is not listed on IDEAS
  7. 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.
  8. Bhargava, Alok, 1991. "Identification and Panel Data Models with Endogenous Regressors," Review of Economic Studies, Wiley Blackwell, vol. 58(1), pages 129-40, January.
  9. Kinsey, Jean D. & Senauer, Benjamin, 1997. "Food Marketing in an Electronic Age: Implications for Agriculture," Choices, Agricultural and Applied Economics Association, vol. 12(2).
  10. Peter M. Guadagni & John D. C. Little, 1983. "A Logit Model of Brand Choice Calibrated on Scanner Data," Marketing Science, INFORMS, vol. 2(3), pages 203-238.
  11. Cornwell, Christopher & Schmidt, Peter & Wyhowski, Donald, 1992. "Simultaneous equations and panel data," Journal of Econometrics, Elsevier, vol. 51(1-2), pages 151-181.
  12. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
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