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Testing for Oligopoly and Oligopsony Power

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  • Azzam, Azzeddine M.
  • Pagoulatos, Emilio

Abstract

This paper extends the conjectural approach in industrial organization to the analysis of imperfections in output and factor markets simultaneously. Starting from the specification of a production function, the econometric analysis is based on the formulation and estimation of a simultaneous equation model consisting of a production function, first order conditions associated with factor employment, and two conjectural elasticities to parametrize the industry's oligopoly and oligopsony equilibria. As an example, we provide an application to the U.S. meat packing industry. Our results suggest that the industry excercised market power in both the output (meat) market and the factor (live animals) market.

Suggested Citation

  • Azzam, Azzeddine M. & Pagoulatos, Emilio, 1989. "Testing for Oligopoly and Oligopsony Power," Working Papers 115906, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    • Handle: RePEc:ags:rpspwp:115906
    DOI: 10.22004/ag.econ.115906
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    References listed on IDEAS

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    1. Schroeter, John R, 1988. "Estimating the Degree of Market Power in the Beef Packing Industry," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 158-162, February.
    2. Gollop, Frank M. & Roberts, Mark J., 1979. "Firm interdependence in oligopolistic markets," Journal of Econometrics, Elsevier, vol. 10(3), pages 313-331, August.
    3. Roberts, Mark J., 1984. "Testing oligopolistic behavior," International Journal of Industrial Organization, Elsevier, vol. 2(4), pages 367-383, December.
    4. Gelfand, Matthew D. & Spiller, Pablo T., 1987. "Entry barriers and multiproduct oligopolies: Do they forebear or spoil?," International Journal of Industrial Organization, Elsevier, vol. 5(1), pages 101-113, March.
    5. Cowling, Keith & Waterson, Michael, 1976. "Price-Cost Margins and Market Structure," Economica, London School of Economics and Political Science, vol. 43(171), pages 267-274, August.
    6. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
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    Citations

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    Cited by:

    1. Steahr, Thomas E. & Roberts, Tanya, 1993. "Microbial Foodborne Disease: Hospitalizations, Medical Costs and Potential Demand for Safer Food," Working Papers 116110, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    2. Langan, Glenn E. & Cotterill, Ronald W., 1994. "Estimating Brand Level Demand Elasticities and Measuring Market Power for Regular Carbonated Soft Drinks," Working Papers 116168, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    3. Unknown, 1990. "Structural Change in Livestock: Causes, Implications, Alternatives," Research Institute on Livestock Pricing 232728, Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics.
    4. 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.
    5. Durham, Catherine A., 1991. "The Empirical Analysis of Oligopsony in Agricultural Markets: Residual Supply Estimation in California's Processing Tomato Market," Research Reports 25200, University of Connecticut, Food Marketing Policy Center.
    6. Cotterill, Ronald W. & Pinkerton, Don C., 1993. "Motives for Mergers in Food Manufacturing," Working Papers 116111, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    7. Ding, John Y. & Caswell, Julie A. & Rogers, Richard T., 1993. "Restructuring's Effect on Related and Unrelated Diversification Among Top Food Manufacturing Firms in the 1980s," Working Papers 116118, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    8. Cotterill, Ronald W. & Salih, Hachim M., 1992. "Testing For Risk Premiums In The Wheat-Flour Subsector," Working Papers 116109, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    9. Caswell, Julie A. & Kleinschmit, Jaana K., 1993. "Economic Criteria for Settling Federalism Disputes with an Application to Food Safety Regulation," Working Papers 116114, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    10. Wen, Hong & Haller, Lawrence E., 1994. "Price Determination in the Bottled Water Industry: A Case Study of Poland Spring," Working Papers 116165, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    11. Bhuyan, Sanjib & Cotterill, Ronald W., 1994. "Countervailing Power and Seller Performance in U.S. Food and Tobacco Manufacturing Industries," Working Papers 116163, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.

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