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Market power in U.S. regional meat supply chains

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  • Lopez, Rigoberto A.
  • Lettu, Sandra
  • Seoane, Luis

Abstract

Discourse surrounding the U.S. meatpacking industry has increasingly focused on concentration and its effects on competition and market power. Although the literature is replete with studies examining these issues using aggregated data, several factors, including transportation constraints for livestock, suggest that farmers primarily operate within local or regional markets. Therefore, locality and heterogeneity in regional supply conditions invariably influence the prices received by livestock farmers and the market power held by packing plants. In this study, we provide new insights into the extent of oligopoly and oligopsony power, if any, at the national and regional levels respectively, that is exercised by the beef packing industry. We also propose a new model to estimate the retail-farm price spread. Leveraging data from multiple sources including the National Establishment Time Series Database (NETS), the U.S. Department of Agriculture (USDA), and the Bureau of Economic Analysis (BEA), we find no evidence of the exercise of oligopsony power at the regional level by beef packing plants.

Suggested Citation

  • Lopez, Rigoberto A. & Lettu, Sandra & Seoane, Luis, 2025. "Market power in U.S. regional meat supply chains," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360969, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea25:360969
    DOI: 10.22004/ag.econ.360969
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    References listed on IDEAS

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    1. Esteban Rossi-Hansberg & Pierre-Daniel Sarte & Nicholas Trachter, 2021. "Diverging Trends in National and Local Concentration," NBER Macroeconomics Annual, University of Chicago Press, vol. 35(1), pages 115-150.
    2. Meilin Ma & Jayson L. Lusk, 2022. "Concentration and Resilience in the US Meat Supply Chains," NBER Chapters, in: Risks in Agricultural Supply Chains, National Bureau of Economic Research, Inc.
    3. 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.
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