A stochastic frontier estimator of the aggregate degree of market power exerted by the US meat packing industry

Article

Abstract

The objective of this study is to measure the aggregate degree of market power exercised by the US meat packing industry with the employment of the recently developed stochastic frontier estimator (SFA) of market power. Furthermore, the present work shows that the SFA estimation technique can be used in order to measure the sum of oligopsonistic and oligopolistic power along a food supply chain. Annual time series data for the period 1970–2011 were employed. The empirical results reveal that, in the US meat packing industry, the farm-to-wholesale price spread is 3.74% above the marginal processing cost. These findings indicate that rather a small percentage of the farm-to-wholesale price spread can be attributed to market power in the US meat packing sector.

Keywords

Meat packing Stochastic frontier analysis Market power 

JEL Classification

Q11 C13 L66 

Notes

Compliance with ethical standards

Conflict of interest

On behalf of all authors, the corresponding author states that there is no conflict of interest.

Supplementary material

40812_2018_93_MOESM1_ESM.csv (4 kb)
Supplementary material 1 (csv 5 kb)

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Copyright information

© Associazione Amici di Economia e Politica Industriale 2018

Authors and Affiliations

  • Dimitrios Panagiotou
    • 1
  • Athanassios Stavrakoudis
    • 1
  1. 1.Department of EconomicsUniversity of IoanninaIoanninaGreece

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