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Impacts from meatpacking firm mergers in an experimental market
Author(s) -
Ward Clement E.,
Lee JongIn
Publication year - 2002
Publication title -
agribusiness
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.57
H-Index - 43
eISSN - 1520-6297
pISSN - 0742-4477
DOI - 10.1002/agr.10015
Subject(s) - econlit , herfindahl index , market concentration , agribusiness , economics , market share , procurement , market definition , industrial organization , business , market structure , index (typography) , microeconomics , marketing , finance , agriculture , ecology , medline , biology , world wide web , political science , computer science , law
Abstract The Fed Cattle Market Simulator ( FCMS ), an experimental market, was used to estimate impacts from two meatpacking firm mergers. Data were collected from two FCMS workshops with large agribusiness firms. Experimental mergers involved the two smaller packers in the market in one case and the two larger packers in another. During the merger period, market prices were significantly higher than prior to the merger in both cases. Following the dissolution, results were mixed. Management of the merged firms appeared to significantly affect how effectively merged packers operated, thus affecting both behavior and performance. For both mergers, profits of the merged firm were higher relative to profits of rival firms. Merged firms appeared to have achieved some synergies in procurement or economies of scope (i.e., multi‐plant economies). An increased Herfindahl index was associated with lower fed cattle prices in one case and higher prices in the other. [EconLit citations: L130, L290, L660]. © 2002 John Wiley & Sons, Inc.