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The Theory of Concentration Oligopsony

Author

Listed:
  • Majid Ahmadian

    (full professor of economics at the university of Tehran)

  • M.A.Motafaker Azad

    (assistant professor of economics at the university of Tabriz)

Abstract

This paper originates the theory of buyer concentration for a main raw material input for a single processing industry. The oilgopsony concentration is obtained and subsequently decomposed into several factors, affecting indirectly the industry's profitability. It is found that the leading firms' efficiencies hypothesis is reaffirmed due to variations associated with the marginal productivity differentials. This finding is based on concentration separation approach rather than analyzing the cost-efficiency effect against market power effect from increasing concentration on the industry's markup, provided by structural approach of minimum cost function

Suggested Citation

  • Majid Ahmadian & M.A.Motafaker Azad, 2006. "The Theory of Concentration Oligopsony," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 11(1), pages 81-92, winter.
    • Handle: RePEc:eut:journl:v:11:y:2006:i:1:p:81
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    References listed on IDEAS

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    1. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
    2. Azzeddine M. Azzam & John R. Schroeter, 1995. "The Tradeoff between Oligopsony Power and Cost Efficiency in Horizontal Consolidation: An Example from Beef Packing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(4), pages 825-836.
    3. Azzam, Azzeddine M, 1997. "Measuring Market Power and Cost-Efficiency Effects of Industrial Concentration," Journal of Industrial Economics, Wiley Blackwell, vol. 45(4), pages 377-386, December.
    4. Ani L. Katchova & Ian M. Sheldon & Mario J. Miranda, 2005. "A dynamic model of oligopoly and oligopsony in the U.S. potato-processing industry," Agribusiness, John Wiley & Sons, Ltd., vol. 21(3), pages 409-428.
    5. Azzeddine M. Azzam, 1997. "Measuring Market Power and Cost‐efficiency Effects of Industrial Concentration," Journal of Industrial Economics, Wiley Blackwell, vol. 45(4), pages 377-386, December.
    Full references (including those not matched with items on IDEAS)

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