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Evaluating Traditional Share-Price and Residual Demand Measures of Market Power in the Catsup Industry

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  • Haller, Lawrence E.
  • Cotterill, Ronald W.

Abstract

In this paper we specify a price determination model which can test both the traditional positive interbrand price - share hypothesis and the negative intrabrand relationship predicted by residual demand analysis. We evaluate this relationship empirically using three-dimensional panel data from the catsup industry. We find support for both hypothesized relationships, and conclude that market power exists in this industry. Further, we conclude that the results depend critically on the characteristics of the data set to be analyzed.

Suggested Citation

  • Haller, Lawrence E. & Cotterill, Ronald W., 1996. "Evaluating Traditional Share-Price and Residual Demand Measures of Market Power in the Catsup Industry," Research Reports 25193, University of Connecticut, Food Marketing Policy Center.
    • Handle: RePEc:ags:uconnr:25193
    DOI: 10.22004/ag.econ.25193
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    1. Connor, John M & Peterson, Everett B, 1992. "Market-Structure Determinants of National Brand-Private Label Price Differences of Manufactured Food Products," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 157-171, June.
    2. Wills, Robert L., 1984. "Advertising and Quality as Sources of Price Heterogeneity Among Brands of Food Products," Working Papers 203001, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    3. Cotterill, Ronald W., 1994. "Scanner Data: New Opportunities For Demand And Competitive Strategy Analysis," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 23(2), pages 1-15, October.
    4. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-754, July/Aug..
    5. Cotterill, Ronald W. & Haller, Lawrence E., 1994. "Market Strategies in Branded Dairy Product Markets," Research Reports 25149, University of Connecticut, Food Marketing Policy Center.
    6. Nelson, Philip & Siegfried, John J & Howell, John, 1992. "A Simultaneous Equations Model of Coffee Brand Pricing and Advertising," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 54-63, February.
    7. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057, Elsevier.
    8. Baker, Jonathan B. & Bresnahan, Timothy F., 1988. "Estimating the residual demand curve facing a single firm," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 283-300.
    9. Cotterill, Ronald W, 1986. "Market Power in the Retail Food Industry: Evidence from Vermont," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 379-386, August.
    10. Harris, Frederick H deB, 1988. "Testable Competing Hypotheses from Structure-Performance Theory: Efficient Structure versus Market Power," Journal of Industrial Economics, Wiley Blackwell, vol. 36(3), pages 267-280, March.
    11. Raymond Deneckere & Carl Davidson, 1985. "Incentives to Form Coalitions with Bertrand Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 473-486, Winter.
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    Cited by:

    1. Ronald Cotterill & William Putsis, 2000. "Market Share and Price Setting Behavior for Private Labels and National Brands," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 17(1), pages 17-39, August.
    2. Lubatkin, Michael H. & Schulze, William S. & Mainkar, Avinash & Cotterill, Ronald W., 1998. "Towards a Post-Structural View of Competition: Three Cases of Horizontal Merger," Research Reports 25150, University of Connecticut, Food Marketing Policy Center.
    3. Pampanini, Rossella & Marchini, Andrea & Diotallevi, Francesco, 2010. "A quantitative analysis of olive oil market in Italy," MPRA Paper 40638, University Library of Munich, Germany.
    4. Peterson, Everett B. & Cotterill, Ronald W., 1998. "Incorporating Flexible Demand Systems in Empirical Models of Market Power," Research Reports 25159, University of Connecticut, Food Marketing Policy Center.
    5. Brendstrup, Bjarne & Paarsch, Harry J. & Solow, John L., 2006. "Estimating market power in the presence of capacity constraints: An application to high-fructose corn sweetener," International Journal of Industrial Organization, Elsevier, vol. 24(2), pages 251-267, March.
    6. Ronald W. Cotterill, 2010. "Antitrust economic analysis in food marketing channels: a global perspective," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 83-91, November.

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    Keywords

    Demand and Price Analysis;

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