Friday, June 18, 2010
Posted by D. Daniel Sokol
Hasan Tekguc, Department of Economics, University of Massachusetts Amherst has some findings on Oligopoly and price transmission in Turkey's fluid milk market.
ABSTRACT: Farmers and consumers suspect that processing firms abuse their power in the milk marketing chain. We employ threshold autoregressive and moment threshold autoregressive tests and contrary to expectations find evidence of a downward trend in UHT milk real price without a corresponding decline in farm-gate prices. The downward trend coincides with increased competition in the dairy industry and with the growing market share of the formal sector at the expense of the informal sector. Major dairy processing firms expand their market share and still enjoy healthy profits thanks to increasing returns to scale in processing and distribution in a growing market.