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Implications Of Increased Regional Concentration And Oligopsonistic Coordination In The Beef Packing Industry

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  • Azzam, Azzeddine M.
  • Schroeter, John R.

Abstract

This article proposes an oligopsony pricing model for projecting the effects of increased concentration or oligopsonistic coordination in beef packing using simulation methods. The model combines an explicit behavioral theory of packing firms with an attempt to respect the regional scope of cattle procurement markets. Our results indicate less danger of falling cattle prices, as a results of increase packer concentration or coordination, than do results from conventional econometric studies.

Suggested Citation

  • Azzam, Azzeddine M. & Schroeter, John R., 1991. "Implications Of Increased Regional Concentration And Oligopsonistic Coordination In The Beef Packing Industry," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(02), December.
  • Handle: RePEc:ags:wjagec:32616
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    References listed on IDEAS

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    1. Johnson, D. Gale & Connor, John M. & Josling, Timothy E. & Schmitz, Andrew & Schuh, G. Edward, 1989. "Concentration Issues In The U.S. Beef Subsector," Working Papers 115907, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    2. A. M. Azzam & E. Pagoulatos, 1990. "Testing Oligopolistic And Oligopsonistic Behaviour: An Application To The Us Meat-Packing Industry," Journal of Agricultural Economics, Wiley Blackwell, vol. 41(3), pages 362-370.
    3. Schroeter, John R, 1988. "Estimating the Degree of Market Power in the Beef Packing Industry," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 158-162, February.
    4. Clarke, Roger & Davies, Stephen W, 1982. "Market Structure and Price-Cost Margins," Economica, London School of Economics and Political Science, vol. 49(195), pages 277-287, August.
    5. Schroeter, John R. & Azzam, Azzeddine M., 1990. "Measuring Market Power in Multi-Product Oligopolies: The U.S. Meat Industry," Staff General Research Papers Archive 11112, Iowa State University, Department of Economics.
    6. Dickson, V. A. & Yu, Weiqiu, 1989. "Welfare losses in Canadian manufacturing under alternative oligopoly regimes," International Journal of Industrial Organization, Elsevier, vol. 7(2), pages 257-267, June.
    7. Geroski, Paul A, 1988. "In Pursuit of Monopoly Power: Recent Quantitative Work in Industrial Economics," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 3(2), pages 107-123, April.
    8. Quail, Gwen & Marion, Bruce & Geithman, Frederick & Marquardt, Jeffrey, 1986. "The Impact of Packer Buyer Concentration on Live Cattle Prices," Working Papers 204089, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
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    Cited by:

    1. Suzuki, Nobuhiro & Kaiser, Harry M. & Lenz, John E. & Forker, Olan D., 1993. "Evaluating U.S. Generic Milk Advertising Effectiveness Using An Imperfect Competition Model," Research Bulletins 123015, Cornell University, Department of Applied Economics and Management.
    2. Love, H. Alan & Capps, Oral, Jr. & Williams, Gary W., 2010. "Concentration In Beef Packing and Slaughter Cattle Pricing," Journal of Food Distribution Research, Food Distribution Research Society, vol. 41(3), November.
    3. Marion, Bruce W. & Geithman, Frederick E., 1994. "Concentration-Price Relations in Regional Fed Cattle Markets," Research Reports 25213, University of Connecticut, Food Marketing Policy Center.
    4. Muth, Mary K. & Wohlgenant, Michael K., 1998. "A Model Of Imperfect Competition Using Marginal Input And Output Prices: Application To The Beef Packing Industry," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20853, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Richards, Timothy J. & Patterson, Paul M. & van Ispelen, Pieter, 1998. "Modeling Fresh Tomato Marketing Margins: Econometrics And Neural Networks," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(2), October.
    6. Azzam, Azzeddine M. & Salvador, Santiago, 2004. "Information pooling and collusion: an empirical analysis," Information Economics and Policy, Elsevier, vol. 16(2), pages 275-286, June.
    7. Adjemian, Michael & Brorsen, B. Wade & Hahn, William & Saitone, Tina L. & Sexton, Richard J., 2016. "Thinning Markets in U.S. Agriculture," Economic Information Bulletin 232928, United States Department of Agriculture, Economic Research Service.
    8. Maes, Dries & Vancauteren, Mark & Van Passel, Steven, 2016. "Investigating market power in the Belgian pork production chain," 149th Seminar, October 27-28, 2016, Rennes, France 245114, European Association of Agricultural Economists.
    9. Cai, Xiaowei & Stiegert, Kyle W. & Koontz, Stephen R., 2009. "Oligopsony Power: Evidence from the U.S. Beef Packing Industry," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49364, Agricultural and Applied Economics Association.
    10. Stavrakoudis, Athanassios & Panagiotou, Dimitrios, 2016. "A stochastic frontier estimator of the aggregate degree of market power exerted by the U.S. beef and pork packing industries," MPRA Paper 75997, University Library of Munich, Germany.
    11. Capps, Oral, Jr. & Love, H. Alan & Williams, Gary W. & Adams, Wendi L., 1999. "Examining Packer Choice Of Slaughter Cattle Procurment And Pricing Methods," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 28(1), April.
    12. Dimitrios Panagiotou & Athanassios Stavrakoudis, 2017. "A Stochastic Production Frontier Estimator of the Degree of Oligopsony Power in the U.S. Cattle Industry," Journal of Industry, Competition and Trade, Springer, vol. 17(1), pages 121-133, March.
    13. Yukichika Kawata, 2011. "Extended Model of the Natural Resource Input-Output Market: Game Meat in Latvia as an Example," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 9(2), pages 167-185.
    14. Zhang, Mingxia & Sexton, Richard J., 2000. "Optimal Commodity Promotion In Imperfectly Competitive Markets," 2000 Annual meeting, July 30-August 2, Tampa, FL 21823, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. 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.
    16. 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.
    17. Steiner, Bodo E., 2007. "Formal beef alliances and alignment challenges: issues in contracting, pricing and quality," Project Report Series 7709, University of Alberta, Department of Resource Economics and Environmental Sociology.
    18. Xia, Yin & Buccola, Steven T., 2000. "Technological Performance In Meat Processing And Implications For Policy," 2000 Annual meeting, July 30-August 2, Tampa, FL 21862, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    19. Ronchi, Loraine, 2006. "Fairtrade and market failures in agricultural commodity markets," Policy Research Working Paper Series 4011, The World Bank.
    20. Oleksandr Perekhozhuk, 2013. "Modern Concepts for Pricing Analysis in Imperfect Competition Production Factor Market," Accounting and Finance, Institute of Accounting and Finance, issue 4, pages 99-106, December.
    21. Panagiotou, Dimitrios, 2005. "Cointegration, Error Correction, And The Measurement Of Oligopsony Conduct In The U.S. Cattle Market," 2005 Annual meeting, July 24-27, Providence, RI 19201, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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