Measuring Market Power in Multi-Product Oligopolies: The U.S. Meat Industry

Schroeter, John R.; Azzam, Azzeddine M.

Applied Economics Vol. 22 no. 10 (October 1990): 1365-1376.

This paper develops and estimates an economic model for measuring market power in a quantity-setting oligopoly engaged in the joint production of demand-related goods. The model, which allows for firms' conjectures about both same and cross-market responses to own output variation, is applied to the U.S. meat (beef and pork) industry. The hypothesis that the industry's equilibrium reflects price taking behaviour is rejected. The hypothesis of no cross effects cannot be rejected. Roughly half of the farm-to-retail price spreads for beef and pork appear to be attributable to market power.