If you are experiencing problems downloading PDF or HTML fulltext, our helpdesk recommend clearing your browser cache and trying again. If you need help in clearing your cache, please click here . Still need help? Email help@ingentaconnect.com

Testing Oligopolistic and Oligopsonistic Behavior: An Application to the U.S. Meat-Packing Industry

$25.00 plus tax (Refund Policy)

Buy Article:

Abstract:

Recent empirical work in industrial organization has popularized the use of conjectural-elasticity models to test price-taking behavior. In these models, firms are hypothesized to simultaneously and independently choose their output levels given their beliefs about rivals' reactions to their output choice, and these beliefs are called conjectural variations. A firm's conjectural elasticity is the conjectural variation of the firm multiplied by its market share. Several studies have estimated such models (see Geroski (1988) and Bresnahan (1987) for surveys), but virtually all applications consider price-taking behavior only in the output market. Only one (Schroeter 1988) considers the possibility of imperfections in output and factor markets. From the standpoint of econometric estimation, inferring pricing distortions from an oligopoly/oligopsony model would involve a simple adaptation of an oligopoly model (such as that of Appelbaum (1982) for example) where, in addition to the parameter estimates of a cost function, an output demand function, and conduct as parameterized by the conjectural elasticity, one also needs information on the parameter estimates of the supply function(s) of the oligopsonized input(s). However, the problem is that such adaptation is possible only if certain restrictions are imposed on the firm/s cost function.

Since the cost function has as arguments the price(s) of the input(s), deriving an expression for the conjectural elasticity in the factor market is not straightforward unless the production technology is restricted to be of fixed proportions between the output and the oligopsonistically purchased input. Consequently, the conjectural elasticities in the imperfect output and input markets turn out to be identical since the oligopsonized input and output can be represented by the same variable in the profit function (see Schroeter (1988)). The problem with this formulation is that identical conduct in the two markets is not an implication of oligopoly/oligopsony theory but a result of the imposed technology.

Document Type: Research Article

Publication date: January 1, 2006

More about this publication?
  • New Empirical Industrial Organization and the Food System
    The new empirical industrial organization (NEIO) is a pioneering framework developed by economists to measure the degree of competitiveness of economic sectors. The primary contribution of NEIO is the generalization of perfect-competition and monopoly models to intermediate imperfect-competition models that can be empirically estimated. This framework has been applied to many sectors to provide policymakers dealing with antitrust issues with empirical evidence of market power throughout the marketing channel. This is the first book to provide a detailed, systematic overview of NEIO. The authors present a comprehensive synopsis of the theory and application of NEIO as well as selected case studies to the food sector.
  • Submit a Paper
  • Purchase hard copy print edition
  • Learn more about Peter Lang @ GSE Research
  • ingentaconnect is not responsible for the content or availability of external websites
Related content

Tools

Favourites

Share Content

Access Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content
Cookie Policy
X
Cookie Policy
ingentaconnect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more