This paper extends the conjectural approach in industrial organisation to the analysis of imperfections in output and factor markets. Starting from the specification of a production function, the econometric analysis is based on the formulation and estimation of a simultaneous‐equation model consisting of a production function, first‐order conditions associated with factor employment, and two conjectural elasticities to parameterise the industry's oligopoly and oligopsony equilibria. As an example, we provide an application to the US meat‐packing industry. Our results suggest that the industry exercises market power in both the output (meat) market and the factor (live animal) market.

This article demonstrates how retail-price transmission asymmetry can arise from intertemporal optimizing behavior among spatially competitive retailers facing concave spatial demand and shows that vigorous competition among retailers may not necessarily result in the larger retail-price declines farmers expect during periods of declining farm prices. It also shows that, when this particular class of retailers incurs repricing costs, retail prices can be rigid over a range of upward and downward movements in the farm price. This suggests that the rigidity of retail prices, during periods of declining farm prices, could be due to repricing costs. It also suggests that the appropriate econometric model of price-transmission is the model of friction, where Tobit analysis is the proper method of estimation rather than nonreversible functions. Copyright 1999, Oxford University Press.

In this paper I show how Appelbaum's framework for testing pricetaking behavior in a single industry can be formally extended to consider concentration explicitly. In so doing, I separate the market power e¡ect of concentration from its cost-e¤ciency e¡ect. Data from the US beef-packing industry are used to illustrate an empirical application of the model. The ¢ndings support oligopsonistic market power and slaughter-cost e¤ciency in the industry. However, the coste¤ciency e¡ect outweighs the market-power e¡ect.

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This paper provides a conceptual and empirical framework for analyzing marketing margins in a noncompetitive food‐processing industry facing output price uncertainty. The framework allows the decomposition of observed margins into components reflecting the marginal cost of the processing industry, oligopoly/oligopsony price distortions, and an output price risk component. The empirical procedure is applied to a time series of spreads between wholesale pork prices and farm prices of market hogs. The principal finding is that, while farm/wholesale margins are more consistent with competitive performance now than they were fifteen years ago, the output price risk component persisted throughout the sample period.