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Concentration change in selected food manufacturing industries: The influence of mergers vs. internal growth

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  • Bruce W. Marion

    (Department of Agricultural Economics at the University of Wisconsin-Madison)

  • Donghwan Kim

    (Department of Agricultural Economics at the University of Wisconsin-Madison)

Abstract

Concentration of sales among the leading manufacturers changed sharply in some relatively undifferentiated food processing industries in the 1980s. In six industries examined, CR 4 increased 23 points, on average, from 1977 to 1988. Mergers accounted for virtually all of the concentration increase in three, and roughly half of the increase in the other three. Overall, internal growth accounted for about one-third of the increase in concentration in the six industries. The relaxation of antitrust enforcement during the 1980s likely encouraged several large horizontal mergers that significantly increased concentration in these industries. At least seven mergers appear to have violated the Dept. of Justice Merger Guidelines of 1984.

Suggested Citation

  • Bruce W. Marion & Donghwan Kim, 1991. "Concentration change in selected food manufacturing industries: The influence of mergers vs. internal growth," Agribusiness, John Wiley & Sons, Ltd., vol. 7(5), pages 415-431.
    • Handle: RePEc:wly:agribz:v:7:y:1991:i:5:p:415-431
    DOI: 10.1002/1520-6297(199109)7:5<415::AID-AGR2720070502>3.0.CO;2-R
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    References listed on IDEAS

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    1. Krugman, Paul R., 1989. "Industrial organization and international trade," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 20, pages 1179-1223, Elsevier.
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    Cited by:

    1. Baines, Joseph, 2014. "Food Price Inflation as Redistribution: Towards a New Analysis of Corporate Power in the World Food System (Preprint)," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 19(1), pages 79-112.
    2. Aggarwal, Rimjhim M., 1999. "Private versus Social Incentives for Backward Integration by Food Processors under Input Supply and Output Demand Uncertainty," Working Papers 197858, University of Maryland, Department of Agricultural and Resource Economics.
    3. Declerck, Francis, 2016. "Mergers & Acquisitions in the Food Business: How did the 2002 and 2008/2009 Economic Crises Impact Corporate Valuation?," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 7(3), pages 1-13, June.
    4. Adesoji Adelaja & Rodolfo Nayga & Zafar Farooq, 1999. "Predicting mergers and acquisitions in the food industry," Agribusiness, John Wiley & Sons, Ltd., vol. 15(1), pages 1-23.
    5. Ward, Clement E., 2002. "A Review of Causes for and Consequences of Economic Concentration in the U.S. Meatpacking Industry," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 3, pages 1-28, January.
    6. Kojo S. Amanor, 2019. "Global Value Chains and Agribusiness in Africa: Upgrading or Capturing Smallholder Production?," Agrarian South: Journal of Political Economy, Centre for Agrarian Research and Education for South, vol. 8(1-2), pages 30-63, April.
    7. R A Jussaume Jr, 1998. "Globalization, Agriculture, and Rural Social Change in Japan," Environment and Planning A, , vol. 30(3), pages 401-413, March.
    8. Brent Berry & Taralyn McMullen, 2008. "Visual communication to children in the supermarket context: Health protective or exploitive?," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 25(3), pages 333-348, September.
    9. Gray, Thomas W., 2009. "Selecting a Cooperative Membership Structure for the Agriculture-of-the- Middle Initiative," Research Reports 280104, United States Department of Agriculture, Rural Development.
    10. Rogers, Richard T., 1990. "The Role of Marketing Cooperatives in Increasingly Concentrated Agricultural Markets: Reaction," Cooperatives: Their Importance in the Future Food and Agricultural System - FAMC 1990 Conference 265917, Food and Agricultural Marketing Consortium (FAMC).
    11. Ding, John Y. & Caswell, Julie A. & Zhou, Furen, 1997. "Relatedness And Performance: A Reexamination Of The Diversification-Performance Link," Journal of Food Distribution Research, Food Distribution Research Society, vol. 28(1), pages 1-8, February.
    12. Richard T. Rogers, 2001. "Structural change in U.S. food manufacturing, 1958-1997," Agribusiness, John Wiley & Sons, Ltd., vol. 17(1), pages 3-32.
    13. Jensen, Kimberly L., 1995. "Industrialization In Agriculture: Discussion," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(1), pages 1-4, July.
    14. Schwartz, Lisa A. & Willett, Lois Schertz, 1994. "Price Transmission Theory And Applications To Agroindustry: An Annotated Bibliography," Research Bulletins 123003, Cornell University, Department of Applied Economics and Management.
    15. Azzam, Azzeddine M., 1998. "Competition in the US meatpacking industry: is it history?," Agricultural Economics, Blackwell, vol. 18(2), pages 107-126, March.
    16. Adams, Wendi L. & Love, H. Alan & Capps, Oral, Jr., 1997. "Structural Analysis Of Mergers And Acquisitions In The Food Industry," Journal of Food Distribution Research, Food Distribution Research Society, vol. 28(2), pages 1-13, July.
    17. Rogers, Richard T., 1992. "Broilers -- Differentiating A Commodity," Research Reports 25178, University of Connecticut, Food Marketing Policy Center.
    18. Baines, Joseph, 2015. "Price and Income Dynamics in the Agri-Food System: A Disaggregate Perspective," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 157992, July.
    19. Deodhar, Satish Y. & Sheldon, Ian M., 1997. "Market Power In The World Market For Soymeal Exports," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(1), pages 1-9, July.
    20. Neumann, Gyde & Weiss, Christoph R., 2001. "Strukturwandel durch Fusionen im Ernährungssektor: Ein anhaltender Konzentrationsprozess?," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 50(06), pages 1-9.
    21. Michael Boehlje & Jay Akridge & Dave Downey, 1995. "Restructuring agribusiness for the 21st century," Agribusiness, John Wiley & Sons, Ltd., vol. 11(6), pages 493-500.
    22. 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.
    23. Scoppola, Margherita, 1995. "Multinationals and agricultural policy in the EC and USA," Food Policy, Elsevier, vol. 20(1), pages 11-25, February.

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