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Imperfect Competition between Milk Manufacturers and Retailers in a Midwestern State in the U.S

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  • Hovhannisyan, Vardges
  • Stiegert, Kyle W.

Abstract

This manuscript studies the market conduct of the milk manufacturers and retail chains in a Midwestern state in the U.S. Following the menu approach we employ a random coefficient logit demand model to investigate several possible scenarios on the supply side. Demand estimates are obtained using both cross-sectional and time series variation in data. We also allow annual variation in consumer demographics which helps identify the coefficients of interaction between consumer demographics and product characteristics. To further enhance identification power we allow choice set of milk to vary across markets. The results are most supportive of the conjecture that manufacturers behave competitively letting the retailers be the residual claimants. Later they may collect a part or full rents from the retailers through two-part tariffs.

Suggested Citation

  • Hovhannisyan, Vardges & Stiegert, Kyle W., 2011. "Imperfect Competition between Milk Manufacturers and Retailers in a Midwestern State in the U.S," 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas 98844, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea11:98844
    DOI: 10.22004/ag.econ.98844
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    References listed on IDEAS

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    Keywords

    Agribusiness; Agricultural and Food Policy; Demand and Price Analysis; Industrial Organization;
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