Examining Market Power in the Finnish Dairy Chain

Valtiala, Juho; Rezitis, Anthony N.

doi:10.22004/ag.econ.261419

Cited by 1 publication

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“…Cakir and Balagtas (2012) studied the market power of milk processors where in addition to processor input prices, the upstream and downstream prices were used to estimate the pricing equation and the consumer income, subsidy price given by the government, and price of substitution goods were used as demand shifters. Valtiala (2017) used upstream marginal cost and retail input prices to estimate the pricing equation and income of consumers, retail promotion and discounts were used as demand shifters in the demand equation to investigate the market power of retail milk sellers. Similarly, the CV model was used to estimate the market power of organic crop farms (Lass et al, 2011).…”

Section: Literature Reviewmentioning

confidence: 99%

“…The nominal price of paddy had increased sharply due to the global food crisis at the end of 2007 and throughout the year 2008 (Wijetunga, 2011). Farmers were paid at a high rate in 2014 and 2017 as the paddy production declined in both Maha and Yala 1 seasons in the aforementioned years due to adverse weather conditions (Central Bank of Sri Lanka, 2014, 2017.…”

Section: Introductionmentioning

confidence: 99%

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Assessing the Degree of Market Power in the Rice Milling Industry of Sri Lanka: An Application of the NEIO Approach

Mufeeth

Weerasooriya

Weerahewa

2022

Studies in Microeconomics

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This study used the New Empirical Industrial Organization (NEIO) approach to estimate the presence and factors affecting the market power of the rice milling industry in Sri Lanka. Annual data from 1982 to 2019 were used for the analysis. The miller’s pricing and demand models were estimated using the non-linear Seemingly Unrelated Regression (SUR) estimation technique. The estimated conjectural variation elasticity and the Lerner index of the Sri Lankan rice milling industry were 0.348 and 0.677 correspondingly and the results were significantly (p < 0.05) different from zero and one respectively. This depicts that the rice milling market exhibits oligopoly power in setting the price of rice above its marginal cost. Market power was significantly (p < 0.05) reduced by the implementation of the Government Ceiling Price (GCP) on rice. The study findings suggest the importance of consistent implementation and monitoring of GCP policies to control the market power of the rice milling industry in Sri Lanka. JEL Classification: D22, D43, L00

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Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%