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Production Contracts and Buyer Market Power in the U.S. Broiler Chicken Industry

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  • Bolotova, Yuliya V.

Abstract

The motivations for this case study are recent developments in the U.S. broiler chicken industry involving allegations of an illegal exercise of buyer market power by the five largest broiler chicken processors in the country in the market for broiler grow-out services. This case study introduces economic, business, and legal issues related to the alleged input price-fixing cartel of the five largest broiler processors. The case study describes the broiler processors’ conduct and presents a theoretical framework that may explain market and price effects of the alleged input price-fixing cartel. In addition, the case study introduces a comprehensive analysis of a sample broiler production agreement between a broiler grower and a broiler processor with a particular attention paid to design of the payment (compensation) system included in this agreement. The teaching note provides suggested answers to discussion and analytical questions, and it also includes multiple-choice questions that can be used as in-class assignments, quizzes, and exam questions.1 This case study is suitable for a variety of undergraduate and graduate courses taught in agricultural economics and agribusiness programs and for extension and outreach audiences.

Suggested Citation

Handle: RePEc:ags:aaea24:344127
DOI: 10.22004/ag.econ.344127
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