Dynamic Assessment of Oligopoly, Oligopsony Power, and Cost Efficiency using the New Empirical Industrial Organization in the U.S. Beef Packing Industry

Abstract

In this paper, the new empirical industrial organization approach with a dynamic model is simultaneously employed to measure the degree of oligopoly, oligopsony power, and cost efficiency in the U.S. beef packing industry. The oligopsony power is estimated with two effects: cash cattle procurement market power and captive supply market power. The model is estimated by the Generalized Method of Moments using monthly data from 1990 to 2006. The empirical results reveal the presence of market power in both the beef retail market and the cattle procurement market in the sample period. The captive supply is a source of oligopsony market power, but the effect is considerably small. The oligopsony market power is greater and less stable than oligopoly market power for the whole sample period. The cost efficiency effect outweighs the market power effects for the sample period.beef packing industry, captive supply, cost efficiency, industrial concentration, market power, NEIO, Agricultural and Food Policy, Industrial Organization, Livestock Production/Industries, Marketing, Q13,