Measuring Market Power and Cost‐efficiency Effects of Industrial Concentration

Azzam, Azzeddine

doi:10.1111/1467-6451.00054

Cited by 118 publications

(83 citation statements)

References 22 publications

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“…From early days, most of the theoretical and empirical NEIO work focused on output markets (Appelbaum 1982;Braverman and Gausch 1986;Bresnahan 1981;Bresnahan 1982;McCorriston 1993;Sumner 1981). The extension to input markets was largely due to the work of agricultural economists (Azzam 1997;Durham and Sexton 1992;Hyde and Perloff 1994;Just and Chern 1980;Lopez, et al 1993;Wann and Sexton 1992). In simplest terms, the theoretical underpinnings of the structural NEIO models draw on oligopoly/monopoly theory to estimate a parameter whose value reveals if the firm or industry is exhibiting market power.…”

Section: Measuring Market Power As a Market Failurementioning

confidence: 99%

Fairtrade And Market Failures In Agricultural Commodity Markets

Ronchi¹

2006

Policy Research Working Papers

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This paper concerns an NGO intervention in agricultural commodity markets known as "Fairtrade". Fairtrade pays producers a minimum unit price and provides capacity building support to member cooperative organizations. Fairtrade's organizational capacity support targets those factors believed to reduce the commodity producer's share of returns. Specifically, Fairtrade justifies its intervention in markets like coffee by claiming that market power and a lack of capacity in producer organizations 'marks down' the prices producers receive. As the market share of Fairtrade coffee grows in importance, its intervention in commodity markets is of increasing interest. Using an original data set collected from fieldwork in Costa Rica, this paper assesses the role of Fairtrade in overcoming the market factors it claims limits producer returns. Features of the Costa Rican input market for coffee permit a generalization of the results. The empirical results find that market power is a limiting factor in the Costa Rican market and that Fairtrade does improve the efficiency of cooperatives, thereby increasing the returns to producers. These results do not depend on the minimum price policy of Fairtrade and therefore can inform on its organizational support activities. Finally, the results also suggest that producers selling to vertically integrated, multinational coffee mills face lower producer price 'mark-downs' compared with domestically owned non-cooperative mills. This result contradicts the popular view that the increasing concentration of vertically integrated multinational firms accounts for a decline in producers' share of coffee returns.

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Section: Measuring Market Power As a Market Failurementioning

confidence: 99%

Fairtrade And Market Failures In Agricultural Commodity Markets

Ronchi¹

2006

Policy Research Working Papers

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“…Therefore, several previous studies in the industrial organization literature develop bilateral oligopoly/oligopsony models that potentially allow market power for both buyers and sellers [15] [25] [26]. For example, Azzam's [25] econometric analysis shows that neither sellers nor buyers dominate between the U.S. beef packing industry and retail-grocery industry. The industry data also suggest that both retailers and packers may exercise oligopsony and oligopoly power, respectively: the CR4 in the U.S. beef packing industry in 2011 was 84% [27], while about 60% of four largest grocery chains' beef procurement in U.S. is directly from packers [25].…”

Section: Derivation Of Optimal Commodity Advertising Intensity In Bilmentioning

confidence: 99%

“…For example, Azzam's [25] econometric analysis shows that neither sellers nor buyers dominate between the U.S. beef packing industry and retail-grocery industry. The industry data also suggest that both retailers and packers may exercise oligopsony and oligopoly power, respectively: the CR4 in the U.S. beef packing industry in 2011 was 84% [27], while about 60% of four largest grocery chains' beef procurement in U.S. is directly from packers [25]. ( ) Similarly, the profit maximization problem for the j th processor can be expressed as:…”

Section: Derivation Of Optimal Commodity Advertising Intensity In Bilmentioning

confidence: 99%

Optimal Commodity Advertising in Bilateral Oligopoly

Chung¹

2018

TEL

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This study derives an optimal commodity advertising intensity rule for a vertically related market under bilateral oligopoly. The new optimality condition derived in this study extends the seminal Dorfman-Steiner Theorem [1] and recently published optimal advertising conditions by two major aspects. First, we strengthen the previous work by considering potential market power exertion in all buying (input) and selling (output) markets, i.e., all four adjacent upstream and downstream markets of processors and retailers. Second, we use a primal production function approach to avoid the symmetry assumption that many earlier studies imposed on conjectural elasticities of input and/or output markets. Our new condition suggests that, without considering the potential market power exertions, the optimal advertising intensity and expenditures are overestimated. Our derivation also indicates that previous optimal advertising conditions derived under the assumption of fixed proportion technology could underestimate the optimal intensity and expenditures, particularly when advertising elasticity is elastic.

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“…Penelitian tentang hubungan antara konsentrasi industri terhadap profitabilitas, efisiensi, produktivitas, dan kekuatan pasar telah dilakukan oleh Azzam (1997), Gopinath et al (2002), Kim et al (2002), Resende (2007) dan Mendoza (2013) yang dilakukan secara terpisah di berbagai negara dan berbagai sektor, namun kajian pada industri broiler masih relatif terbatas. Hasil kajian Tangendjaja (2010) menunjukkan bahwa Malaysia mempunyai biaya produksi ayam hidup yang lebih rendah dibanding Indonesia, baik ditinjau dari biaya DOC (0,21 vs 0,38 US$) maupun biaya pakan baik stater (0,21 vs 0,24 US$) maupun grower (0,20 vs 0,23 US$).…”

Section: Pendahuluanunclassified