IDEAS home Printed from https://ideas.repec.org/a/oup/ajagec/v94y2012i3p647-658.html
   My bibliography  Save this article

Estimating Market Power of U.S. Dairy Cooperatives in the Fluid Milk Market

Author

Listed:
  • Metin Cakir
  • Joseph V. Balagtas

Abstract

A structural econometric model of vertical relationships is adopted to identify pricing behavior in the supply chain for fluid milk in the United States. The model consists of a system of equations that allows estimation of oligopoly power of dairy co-operatives and downstream firms, exploiting federal milk marketing order regulations to identify co-operatives' marginal cost. A key finding is that co-operatives use their market power to raise the farm price of milk by almost 9% above marginal cost, resulting in an income transfer of more than $600 million per year in markets regulated by federal milk marketing orders. Copyright 2012, Oxford University Press.

Suggested Citation

  • Metin Cakir & Joseph V. Balagtas, 2012. "Estimating Market Power of U.S. Dairy Cooperatives in the Fluid Milk Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(3), pages 647-658.
  • Handle: RePEc:oup:ajagec:v:94:y:2012:i:3:p:647-658
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/ajae/aar136
    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.

    References listed on IDEAS

    as
    1. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, December.
    2. Machina, Mark J, 1982. ""Expected Utility" Analysis without the Independence Axiom," Econometrica, Econometric Society, pages 277-323.
    3. Machina, Mark J, 1982. ""Expected Utility" Analysis without the Independence Axiom," Econometrica, Econometric Society, pages 277-323.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Agbo, Maxime & Rousselière, Damien & Salanié, Julien, 2015. "Agricultural marketing cooperatives with direct selling: A cooperative–non-cooperative game," Journal of Economic Behavior & Organization, Elsevier, pages 56-71.
    2. Çakır, Metin & Nolan, James, 2015. "Revisiting Concentration in Food and Agricultural Supply Chains: The Welfare Implications of Market Power in a Complementary Input Sector," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(2), May.
    3. Patrice Bougette & Oliver Budzinski & Frédéric Marty, 2017. "Exploitative Abuse and Abuse of Economic Dependence: What can we Learn from the Industrial Organization Approach?," GREDEG Working Papers 2017-37, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    4. Xiaowei Cai & Kyle W. Stiegert, 2013. "Economic analysis of the US fluid milk industry," Applied Economics Letters, Taylor & Francis Journals, pages 971-977.
    5. Camille Cornand & Cheick Kader M'Baye, 2013. "Does Inflation Targeting Matter ? An Experimental Investigation," Working Papers halshs-00877409, HAL.
    6. Zavelberg, Yvonne & Wieck, Christine & Heckelei, Thomas, 2015. "How can differences in German raw milk prices be explained? An empirical investigation of market power asymmetries," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205489, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    7. Patrice Bougette & Oliver Budzinski & Frédéric Marty, 2017. "Exploitative Abuse and Abuse of Economic Dependence: What can we Learn from the Industrial Organization Approach?," GREDEG Working Papers 2017-37, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    8. Maxime Agbo & Damien Rousselière & Julien Salanié, 2013. "A Theory of Agricultural Marketing Cooperatives with Direct selling," Working Papers halshs-00906894, HAL.
    9. Michée Arnold Lachaud & Boris E. Bravo-Ureta & Carlos E. Ludeña, 2015. "Agricultural Productivity Growth in Latin America and the Caribbean and Other World Regions: An Analysis of Climatic Effects, Convergence and Catch-up," IDB Publications (Working Papers) 7209, Inter-American Development Bank.
    10. Lopez, Rigoberto A. & Zheng, Hualu & Azzam, Azzeddine, 2015. "Oligopoly Power in the Food Industries Revisited: A Stochastic Frontier Approach," Working Papers 39, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    11. Moro, Daniele & Paolo, Sckokai & Veneziani, Mario, 2012. "Multi-stage Market Power in the Italian Fresh Meat Industry," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 125065, Agricultural and Applied Economics Association.

    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:94:y:2012:i:3:p:647-658. 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) or (Christopher F. Baum). 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 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.