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BSE Disease Outbreaks, Structural Change and Market Power in the Canadian Beef Industry

Author

Listed:
  • Clark, J. Stephen
  • Cechura, Lukas
  • Berhanu, Adugna

Abstract

This study examines farm to wholesale prices spreads to measure the impact of the Bovine Spongiform Encephalopathy (BSE) disease outbreak on the Canadian beef industry. The study uses structure break tests developed by Gregory and Hansen (1996) and Hansen (1992) examine possible breaks within cointegrating relationships. The study finds evidence that the industry began a realignment as a result of the UK BSE disease outbreak, and the Canadian BSE disease outbreak was simply the largest realignment of the process beginning with the UK disease outbreak. However, the only statistically significant break was the BSE disease outbreak itself in May 2003. Stability was not restored until the border was reopened in 2005. Specific results indicated that the processing sector exploited the border closure in May 2003 to enhance its market power and that the system returned to a competitive one after the border re-opened in July 2005.

Suggested Citation

  • Clark, J. Stephen & Cechura, Lukas & Berhanu, Adugna, 2011. "BSE Disease Outbreaks, Structural Change and Market Power in the Canadian Beef Industry," Working Papers 114097, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
    • Handle: RePEc:ags:spaawp:114097
    DOI: 10.22004/ag.econ.114097
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    References listed on IDEAS

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    Keywords

    Agribusiness; Industrial Organization; International Relations/Trade;
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