IDEAS home Printed from https://ideas.repec.org/a/oup/ajagec/v75y1993i3p537-548..html
   My bibliography  Save this article

Meatpacker Conduct in Fed Cattle Pricing: An Investigation of Oligopsony Power

Author

Listed:
  • Stephen R. Koontz
  • Philip Garcia
  • Michael A. Hudson

Abstract

Market power in regional fed cattle markets is measured with an econometric model which links behavior of the margin between boxed beef and fed cattle prices to an economic model of conduct. A noncooperative game theoretic model suggests that for tacitly collusive pricing behavior to persist in equilibrium, oligopsonists must follow a discontinuous pricing strategy. Meatpackers pay low prices for cattle during cooperative phases and purchase cattle aggressively during noncooperative phases. Tests for cooperative/noncooperative conduct and measures of market power are presented. Fed cattle prices in four direct trade regions in the central United States are examined. Evidence of cooperative/noncooperative conduct is present in all markets but has declined over time. Varying conduct across markets and over time suggests it is important to continue monitoring fed cattle markets to assure a competitive environment.

Suggested Citation

  • Stephen R. Koontz & Philip Garcia & Michael A. Hudson, 1993. "Meatpacker Conduct in Fed Cattle Pricing: An Investigation of Oligopsony Power," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 537-548.
  • Handle: RePEc:oup:ajagec:v:75:y:1993:i:3:p:537-548.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.2307/1243561
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liang, Jing, 2010. "Three essays on food safety and foodborne illness," ISU General Staff Papers 201001010800002782, Iowa State University, Department of Economics.
    2. 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.
    3. Jones, Rodney & Purcell, Wayne & Driscoll, Paul & Peterson, Everett, 1996. "Issues and Cautions in Employing Behavioral Modeling Approaches to Test for Market Power," Staff Papers 232517, Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics.
    4. Alexandre Gohin & Hervé Guyomard, 2000. "Measuring Market Power for Food Retail Activities: French Evidence," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 181-195, May.
    5. Seo, Jeong-Yun, 1998. "Exchange rate and market power in import price," ISU General Staff Papers 1998010108000013522, Iowa State University, Department of Economics.
    6. Inbae Ji & Chanjin Chung & Jungmin Lee, 2017. "Measuring Oligopsony Power in the U.S. Cattle Procurement Market: Packer Concentration, Cattle Cycle, and Seasonality," Agribusiness, John Wiley & Sons, Ltd., vol. 33(1), pages 16-29, January.
    7. Guci, Ledia & Brown, Mark G., 2007. "Changes in the Structure of the Florida Processed Orange Industry and Potential Impacts on Competition," Research papers 36811, Florida Department of Citrus.
    8. 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.
    9. Hunnicutt, Lynn & Weninger, Quinn, 1999. "Testing for Market Power in Beef Packing: Where Are We and What's Next?," Staff Papers 232538, Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics.
    10. Chen, Yuquan & Yu, Xiaohua, 2018. "Does the centralized slaughtering policy create market power for pork industry in China?," China Economic Review, Elsevier, vol. 50(C), pages 59-71.
    11. Xiaowei Cai & Kyle Stiegert & Stephen Koontz, 2011. "Regime switching and oligopsony power: the case of U.S. beef processing," Agricultural Economics, International Association of Agricultural Economists, vol. 42(1), pages 99-109, January.
    12. Alessandro Bonanno & Carlo Russo & Luisa Menapace, 2018. "Market power and bargaining in agrifood markets: A review of emerging topics and tools," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 6-23, December.
    13. Hunnicutt Lynn & Aadland David, 2003. "Inventory Constraints in a Dynamic Model of Imperfect Competition: An Application to Beef Packing," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 1(1), pages 1-24, March.
    14. Fausti, Scott W. & Qasmi, Bashir A. & Diersen, Matthew A & Adamson, Bill, 2014. "Grid Valuation of Beef Carcass Quality: Market Power and Market Trends," Economics Staff Papers 171423, South Dakota State University, Department of Economics.
    15. repec:ags:vtaesp:232464 is not listed on IDEAS

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:ajagec:v:75:y:1993:i:3:p:537-548.. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press). General contact details of provider: http://edirc.repec.org/data/aaeaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.