There are numerous accusations of collusion in protein markets throughout the United States. The cattle market is no exception. The four major meatpackers stand accused of acting in concert to lower the quantity of cattle purchased in the cash market for fed cattle. The plaintiffs in these cases allege that these meatpackers have purposefully depressed the price they pay to various cattle ranchers and feedlot operators. This article explores the allegations brought forth in one of these complaints, as well as the economic consequences resulting from the formation of a cartel in this market if a collusive agreement truly exists.
A vast number of empirical studies have found that monopsony power is pervasive in labor markets. In some circumstances, the exercise of monopsony results in wage discrimination that is not taste‐based. Instead, it results from profit maximization in the presence of different labor supply functions of two distinct groups of workers. This paper examines the profit maximizing employment decisions of a monopsonist under these conditions, as well as the public policy regarding wage discrimination. The economic effects of the current statutes are also examined, as well as some policy recommendations to strengthen the prohibition of wage discrimination.
The exercise of unlawful monopsony power by buyer cartels depresses both the price paid and the quantity purchased. Consequently, producer surplus and social welfare decline from competitive levels. There are six classes of antitrust victims, but only one has standing to sue for antitrust damages in the United States. The other five are neglected. We identify the neglected victims in this article. We also suggest some ways to expand the protection offered by section 4 of the Clayton Act.
Allegations of collusion are prevalent in many of the major protein markets including beef, chicken, eggs, pork, salmon, tuna, and turkey. The sources of collusion, however, are different across markets. For some markets, like chicken and pork, the collusion was allegedly facilitated through information exchanges using Agri Stats, a data collection and sharing service. In other markets, the collusion was facilitated among parties within the market. There are allegations of collusion in the input markets for some proteins, the output markets for others, and some like chicken and beef have allegations in both. While many of these cases are ongoing, there have been a few cases where settlements have been reached or the courts have decided on a verdict. This introduction provides a snapshot of the many articles in our symposium that specialize on one protein market or another. We provide a brief review of each case, as well as emphasize the importance of this research given how substantial the protein markets are in the U.S.
For decades, the suppliers of fed cattle have complained about monopsonistic exploitation by the dominant meatpackers. Recently, a group of ranchers and feedlot operators joined forces to build their own meatpacking plant in an effort to avoid such exploitation. In this context, we show that forward vertical integration by the suppliers of fed cattle will increase their profits while increasing output and lowering prices for consumers. In addition, we show that vertical integration improves both consumer welfare and social welfare. We also examine the use of a joint sales agency, which is an economically equivalent alternative to vertical integration.
In 2020, the Department of Justice and the Federal Trade Commission (FTC) published their Vertical Merger Guidelines (VM Guidelines). The Guidelines were intended to reveal the principal analytical techniques, practices, and enforcement policies employed by the two Agencies, but they were short-lived at the FTC. In 2021, the VM Guidelines were rescinded by the FTC. Even before they were rescinded, their general language and some of the illustrative examples were not fully specified, which made them misleading. As work begins on reconstructing the VM Guidelines, we illustrate some of the weaknesses of the 2020 version and offer some suggestions for their revision. In this article, we will demonstrate why the incomplete specification can lead to some analytical difficulties. In addition, we will offer some clarifications and corrections. Our goal is to suggest refinements to the 2020 VM Guidelines so that they will be more useful in developing future guidelines for antitrust enforcement policy.
Epic Games, the developer of the enormously popular Fortnite, sued Apple for allegedly violating §1 and §2 of the Sherman Act. The central issue was Apple’s requirement that iPhone-compatible apps be purchased in its App Store. Because Apple collects a 30 percent ad valorem tax on each transaction, Epic Games offered an alternative payment option to iPhone owners through the Fortnite app so that consumers could avoid Apple’s 30% fee. When Apple expelled Epic Games from its App Store, Epic sued. In this article, we examine the flawed analysis of the District Court, which can be traced to a fundamental misunderstanding of economic principles.
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