Thursday, June 30, 2011
Posted by D. Daniel Sokol
In Bae Ji, Korea Rural Economic Institute and Chanjin Chung, Oklahoma State University describe Dynamic Assessment of Bertrand Oligopsony in the U.S. Cattle Procurement Market.
ABSTRACT: The new empirical industrial organization approach with the Bertrand model is employed to measure the oligopsony market power in the U.S. cattle procurement market. The assumption of price competition (Bertrand model) based on the nature of cattle production such as cattle cycle and seasonality is used and compared to quantity competition (Cournot model). The empirical results show that the oligopsony market power exists in the U.S. cattle procurement market. The cattle cycle and seasonality affect the oligopsony market power and the cattle cycle causes the change of market power. However, concentration has a negative effect on the oligopsony market power.