exit from the meatpacking industry a microdata analysis we model the determinants of plant exit from the cattle slaughter industry using probit to distinguish between plant level e g age scale and scope and market level e g market share concentration and competitive fringe factors market variables are shown to be less important determinants of exit than plant level factors though a significant tendency for very small plants to exit already highly concentrated markets is apparent government actions to stem the industry s consolidation must consider the trade off between welfare gains from the reduction of market power and welfare losses from foregone technological efficiency improvements

approaches and methods for the econometric analysis of market power a survey and empirical comparison this study discusses two widely used approaches in the new empirical industrial organization neio literature and examines the strengths and weaknesses of the production theoretic approach pta and the general identification method gim for the econometric analysis of market power in agricultural and food markets we provide a framework that may help researchers to evaluate and improve structural models of market power starting with the specification of the approaches in question we compare published empirical studies of market power with respect to the choice of the applied approach functional forms estimation methods and derived estimates of the degree of market power thereafter we use our framework to evaluate several structural models based on pta and gim to measure oligopsony power in the ukrainian dairy industry the pta based results suggest that the estimated parameters of oligopsony power are significantly different from zero while gim based results do not indicate any evidence of oligopsony market power in the ukrainian dairy industry moreover estimations results vary substantially due to the employed estimation procedure

the estimation of welfare levels of a cardinal utility function in order to measure an individual s welfare function of income wfi van praag 1968 1971 the individual is confronted with various welfare levels and asked to associate income levels with them the welfare levels are given as verbal qualifications like good sufficient bad etc it is assumed that these verbal qualifications correspond to intervals of equal length of the range of the wfi here we want to test this assumption a first principal component model is applied the intervals of the range of the wfi associated with the verbal qualifications are estimated and a test of their equality is performed

industrialization and consolidation in the u s food sector implications for competition and welfare good sources for information on recent developments in food market structure include barkema drabenstott and welch u s department of agriculture 1996b and rogers my objective is not to add to this literature but rather to consider what we have learned as a profession about the rapid consolidation in food processing and distribution what are its implications for market power economic efficiency and the distribution of economic welfare among producers consumers and marketers

measuring market power in multi product oligopolies the us meat industry this paper develops and estimates an economic model for measuring market power in a quantity setting oligopoly engaged in the joint production of demand related goods the model which allows for firms conjectures about both same and cross market responses to own output variation is applied to the us meat beef and pork industry he hypothesis that the industry s equilibrium reflects price taking behaviour is rejected the hypothesis of no cross effects cannot be rejected roughly half of the farm to retail price spreads for beef and pork appear to be attributable to market power

oligopoly competition and welfare some recent developments in this essay we wish to highlight three particular areas in the enormous literature on oligopoly where we believe recent work has proved particularly productive and illuminating one recent development of interest has been the application of game theory to the well known interdependence of expectations problem while interesting in its own right it has also had a major impact in clarifying thinking about rational strategic choice and the role of information in affecting outcomes our view is that the information structure of the oligopoly problem plays a crucial role in conditioning the nature of its solution and this is the first topic that we propose to discuss these developments in theory have occurred in tandem with and indeed have stimulated empirical work one important empirical problem is that of identifying the exercise of monopoly power in practice and recent work has focussed on the problem of inferring conduct from observed price output configurations this obviously has a high order of policy importance and it constitutes the second topic in our discussion

meatpacker conduct in fed cattle pricing an investigation of oligopsony power market power in regional fed cattle markets is measured with an econometric model which links behavior of the margin between boxed beef and fed cattle prices to an economic model of conduct a noncooperative game theoretic model suggests that for tacitly collusive pricing behavior to persist in equilibrium oligopsonists must follow a discontinuous pricing strategy meatpackers pay low prices for cattle during cooperative phases and purchase cattle aggressively during noncooperative phases tests for cooperative noncooperative conduct and measures of market power are presented fed cattle prices in four direct trade regions in the central united states are examined evidence of cooperative noncooperative conduct is present in all markets but has declined over time varying conduct across markets and over time suggests it is important to continue monitoring fed cattle markets to assure a competitive environment

demand for beef and chicken products separability and structural change several studies have indicated that the recent shift from beef to poultry in consumption is not entirely caused by changes in rela tive prices or income braschler chavas dahlgran hudson and vertin moschini and meilke frank thurman most studies of structural change have focused on red meat consumption only thurman has looked closely at the poultry market and no one has considered poultry products yet the mix of chicken products marketed changed dramat ically during the last twenty years and should have influenced aggregate meat demand the share of broiler slaughter marketed as whole birds declined from 74 in 1965 to 28 in 1985 while cut up parts and processed chick en products increased from 26 to 72 whole birds are inferior goods and cut up parts and processed chicken are normal goods haidacher et al the shift in chicken prod uct mix away from whole birds should have increased the preference for total chicken in this article two related questions are ad dressed first do consumers allocate expendi tures among meats by animal origin or by product type second does disaggregation of meat into products in a meat demand model give insight into the causes of structural

oligopoly power in the food and tobacco industries in this article we estimate and test for the degree of oligopoly power and economies of scale in forty food and tobacco industries using the new empirical industrial organization neio framework and four digit sic data lerner indices and elasticities of scale are compared throughout the entire food and tobacco industries t tests verify that all but three of these industries exert statistically significant degrees of oligopoly power and that over 82 of these industries exhibit nonconstant returns to scale the empirical results also provide estimates of the price elasticities of demand for each industry

a test for market power using marginal input and output prices with application to the u s beef processing industry for a number of years it has only been applied in rather limited ways in this paper we show how this method can be used to develop a general test for oligopoly and oligopsony behavior the test exploits the fact that under price taking behavior there is a known fixed relationship between changes in input prices on output supply and changes in output price on input demands the model and test developed are shown to be quite general and not dependent on empirical estimates of output demand and input supply we apply this test to the u s beef processing industry because of the high level of market concentration in this industry there is concern that beef packing firms are exercising market power in the purchase of finished cattle by keeping cattle prices below competitive levels and in the sale of packed beef by keeping prices above competitive levels most previous studies of the beef packing industry have found evidence that firms at least part of the time are exercising market power in the purchase of finished cattle schroeter azzam and pagoulatos schroeter and azzam azzam azzam and park koontz garcia and hudson or are exercising market power in the sale of packed beef schroeter schroeter and azzam however all of these studies are fairly restrictive in their assumptions regarding fixed proportions the relationship between market power in the input and output markets and the specification of input supply and output demand previous studies by muth and by muth and wohlgenant 1999 which allow for variable proportions and do not impose restrictions on the relationship of market power in each market did not find evidence of market power in the output and input markets for the beef packing industry however the results of each of these studies do depend on the specification of input supply and output demand

market power and the cattle cycle the relationship between the dynamic cattle cycle and the potential for market power in cattle purchases has rarely been studied this paper provides a conceptual framework showing how the cattle cycle and buyer market power are related not only does a larger cattle stock lead to a lower fed cattle price but the cattle stock s negative effect on price is magnified by the degree of buyer market power in cattle procurement empirical findings support the posited theoretical relationships and help explain why previous researchers reached different conclusions regarding the extent of market power in the industry copyright 2010 oxford university press

entry barriers and multiproduct oligopolies do they forebear or spoil abstract we provide a flexible method to test for a variety of multiproduct oligopolistic models and to estimate the relevance of entry conditions on industrial conduct we find that for the case of the uruguayan banking sector during the late 1970s multiproduct oligopolistic interactions were present however the partial relaxation of legal entry barriers substantially removed the multiproduct nature of these interactions

testing oligopolistic behavior abstract this paper develops an empirical model of short run pricing behavior for firms in a homogeneous product oligopoly it is based on the variable profit function and related output supply and factor demand equations and is used to analyze the behavior of firms in the coffee roasting industry a parametric test of the dominant firm model is developed and applied the hypothesis of dominant firm behavior and cournot behavior are rejected the hypothesis of price taking behavior is rejected for the largest two firms in the industry but is not rejected for all other firms using the estimated pattern of firm behavior an index of overall industry performance is constructed

the estimation of the quantities in the ieq regression abstract the maintained hypothesis that the evaluation question in the measurement of individual welfare functions is answered according to equal intervals of the 0 1 scale is tested under the assumption that the welfare function can be approximated by a lognormal distribution function the quantiles corresponding to the intervals are estimated jointly with the individual parameters of the welfare function the estimation results for the quantiles reject the equal interval hypothesis

testing the monopsony inefficiency incentive for backward integration in theory monopsony at one stage in a vertically related market provides an incentive for backward integration into the adjacent competitive stages by integrating backward a monopsonist internalizes the monopsony inefficiency due to underemployment of the factor produced upstream however little is known about the importance of such incentive in practice in this paper i provide an empirically implementable model to test the monopsony inefficiency incentive for vertical integration for illustration the model is applied to the u s beef slaughter industry findings seem to support the monopsony inefficiency incentive for backward integration by the industry into the live cattle market

estimating the degree of market power in the beef packing industry a technique for assessing the degree of monopoly power developed by appelbaum 1979 1982 is extended here to permit measurement of monopsony power as well data from the u s beef packing industry are examined the results reveal small but statistically significant monopoly monopsony price distortions in slaughter cattle and wholesale beef markets but in spite of a recent trend toward heightened concentration in the industry give no indication that performance has become appreciably less competitive of late this abstract was borrowed from another version of this item

seasonal oligopoly power the case of the us fresh fruit market what has been ignored in much of the existing studies of oligopoly power is that market behaviour need not be static in nature and oligopoly power in agriculture need not be present in every month of the year in a market which is characterized by seasonality and supplied by different sources during different seasons it is quite possible to observe oligopoly power during different months of the year in this paper a method for estimating and testing for seasonal changes in the degree of oligopoly power is introduced it was found that in the pear market oligopoly power coefficients remain low throughout the year on the other hand the grape market is characterized by higher oligopoly power coefficients and considerable season variations

poverty and the measurement of individual welfare a review article this review of hagenaars the perception of poverty gives a lengthy presentation and evaluation of the leyden approach of measuring the individual welfare function of income the key feature of the approach is the claim that welfare can be measured on a 0 1 scale the review discusses the book s wealth of material on poverty in europe within this theoretical framework

imperfect competition in multiproduct food industries with application to pear processing agricultural product markets often involve relatively few firms processing a farm product into multiple processed products this market structure prompts concern that processing firms may exercise both oligopsony and oligopoly power the present paper develops and applies a methodology to test simultaneously for market power in both the raw input market and multiple processed output markets application of the methodology to california pear processing indicates the industry has exerted power in both its farm input market and the markets for canned pears and fruit cocktail

an economic analysis of technology in the meat products industry the meat products industry underwent significant structural change during the last two decades the relocation and expansion of commercial cattle feeding stimulated development of new single species slaughtering facilities to replace older multi species plants an essentially new processing industry arose specializing in breaking and packaging carcasses this forward integration has significantly changed distribution methods of slaughtering and fabricating firms increased emphasis on coordination of inputs led to interest in backward integration from packing into cattle feeding the steer and heifer slaughtering sector which was decentralized and competitive in the 1950s has turned toward centralization and concentration although the largest firm accounted for only 13 of total u s steer and heifer slaughter in 1977 it had more than doubled its share since 1970 in 1978 this firm slaughtered more than twice as many steers and heifers as its nearest competitor in addi

marketing margins market power and price uncertainty this paper provides a conceptual and empirical framework for analyzing marketing margins in a noncompetitive food processing industry facing output price uncertainty the framework allows the decomposition of observed margins into components reflecting the marginal cost of the processing industry oligopoly oligopsony price distortions and an output price risk component the empirical procedure is applied to a time series of spreads between wholesale pork prices and farm prices of market hogs the principal finding is that while farm wholesale margins are more consistent with competitive performance now than they were fifteen years ago the output price risk component persisted throughout the sample period

u s trade policy on lamb meat who gets fleeced the u s lamb meat industry received protection from import competition in 1999 with a tariff rate quota this paper analyzes proposed and adopted policies using a partial equilibrium model of lamb meat and lambs incorporating imperfect competition in the packing industry under a tariff policy packers can only exercise oligopsony power in the lamb market and both packers and lamb growers benefit from protection if a quota or tariff rate quota policy is used packers can assert oligopoly power packers benefit from protection but lamb growers may not under the tariff rate quota adopted lamb growers suffer a welfare loss copyright 2001 oxford university press

competition in the us meatpacking industry is it history the us meatpacking industry has become concentrated to a degree not experienced since the days of the beef trust a century ago a number of mainstream studies have investigated if such concentration has been detrimental to competition just as earlier studies may have helped shape competition policy towards meatpacking a century ago contemporary studies have made their way into current discussions and may shape competition policy at the turn of this century this paper asks whether or not contemporary studies are useful in informing competition policy after comparing how competition looks from the econometric vantage point with how it looks from the vantage point of the industry s 300 yr history this article concludes that mainstream studies are more useful for a competition policy targeting conduct rather than structure

structural change in the demand for meat economists have long thought that shocks in the economy sometimes lead to permanent changes in behavioral relationships hence supply or demand elasticities estimated from econometric models may change over time the source of such structural change may be technological adoption a shift in consumer preferences or an institutional change one way to handle this problem in linear models is to allow the parameters to change as the situation changes so that the model provides a local approximation of the behavioral relationship this approach is an attractive way to deal with structural change problems econometricians have extended the classical