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Market Power and/or Efficiency: An Application to U.S. Food Processing

Author

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  • Rigoberto A. Lopez
  • Azzeddine M. Azzam
  • Carmen Liron-Espana

Abstract

This article separates oligopoly-power and cost-efficiency effects of changes in industrial concentration and assesses their impact on output prices in 32 food-processing industries. Empirical results indicate that although concentration induces cost efficiency in one-third of the industries, oligopoly-power effects either dominate cost efficiency or reinforce inefficiency, resulting in higher output prices in most industries. The article also provides fresh econometric estimates of oligopoly power and economies of size for the industries in question.

Suggested Citation

  • Rigoberto A. Lopez & Azzeddine M. Azzam & Carmen Liron-Espana, 2001. "Market Power and/or Efficiency: An Application to U.S. Food Processing," Food Marketing Policy Center Research Reports 060, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
  • Handle: RePEc:zwi:fpcrep:060
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    References listed on IDEAS

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    1. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
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    3. Catherine J. Morrison Paul, 2001. "Cost Economies And Market Power: The Case Of The U.S. Meat Packing Industry," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 531-540, August.
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    14. Schroeter, John R. & Azzam, Azzeddine M., 1990. "Measuring Market Power in Multi-Product Oligopolies: The U.S. Meat Industry," Staff General Research Papers Archive 11112, Iowa State University, Department of Economics.
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    More about this item

    Keywords

    industrial concentration; economies of scale; industrial organization; oligopoly power; food processing; Agribusiness; Industrial Organization; Productivity Analysis; L00; L11; L13; L66;

    JEL classification:

    • L00 - Industrial Organization - - General - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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