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Estimating oligopsony power on two vertically integrated markets

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  • Grau, Aaron Stephan Alexander
  • Hockmann, Heinrich

Abstract

The paper develops a new approach for the estimation of oligopsony power on two vertically integrated markets. The two subsequent markets with oligopsony power are structurally modelled. Deduced price equations are embedded in a VECM, transformed and estimated via the Kalman-Filter to allow for time-variation in the cointegration parameters. A dynamic factor model extracts common factors from the time-varying coefficients and thereby allows identification of buyers’ market power on both markets. The framework is applied to the German dairy supply chain. Results indicate lower levels of market imperfections on the raw milk and higher levels on the dairy output market.

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  • Grau, Aaron Stephan Alexander & Hockmann, Heinrich, 2017. "Estimating oligopsony power on two vertically integrated markets," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261277, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae17:261277
    DOI: 10.22004/ag.econ.261277
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