IDEAS home Printed from
   My bibliography  Save this paper

Market power: Modeling issues and identification problems. An investigation of selected Hungarian food chains


  • Bakucs, Lajos Zoltan
  • Ferto, Imre
  • Hockmann, Heinrich
  • Perekhozhuk, Oleksandr


In recent years increasing number of contractual arrangements in food chains are observed. There are several reasons for this phenomenon. Improving food quality often requires significant specific investments. Given high asset specificity, investors find it difficult to appropriate the returns on investment and thus have incentives to integrate. However, besides this transaction costs related argument, the ongoing vertical integration can result from structural developments in food chains which at different stages of the value chains, might hamper the proper functioning of markets. Using a unique, firm level dataset, in this paper we will focus on the latter issue. Due to its importance among various Hungarian value chains, we have selected the milk market. The objective is to conduct an analysis of market structure and pricing behaviour, with the main research question being the existence and significance of market power, its impact of factor allocation and the induced incentives for forward and backward integration. Several theoretical and empirical approaches including structural model estimation are applied in order to investigate whether market power is exploited or not. The empirical results are discussed against the background of several issues associated with the functioning of markets and a better understanding of institutional choice. Moreover, policy recommendation will be discussed.

Suggested Citation

  • Bakucs, Lajos Zoltan & Ferto, Imre & Hockmann, Heinrich & Perekhozhuk, Oleksandr, 2009. "Market power: Modeling issues and identification problems. An investigation of selected Hungarian food chains," 113th Seminar, September 3-6, 2009, Chania, Crete, Greece 57977, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa113:57977

    Download full text from publisher

    File URL:
    Download Restriction: no


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

    Cited by:

    1. Čechura, Lukáš & Žáková Kroupová, Zdeňka & Hockmann, H., 2015. "Market Power in the European Dairy Industry," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 7(4), December.


    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:ags:eaa113:57977. 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: (AgEcon Search). General contact details of provider: .

    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.