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Testing for market power in the Australian grains and oilseeds industries
Author(s) -
O'Donnell Christopher J.,
Griffith Garry R.,
Nightingale John J.,
Piggott Roley R.
Publication year - 2007
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.20128
Subject(s) - triticale , agribusiness , market power , profit maximization , imperfect competition , profit (economics) , economics , econlit , product (mathematics) , purchasing , econometrics , industrial organization , marketing , business , agricultural science , microeconomics , agriculture , monopoly , mathematics , agronomy , ecology , geometry , medline , political science , law , biology , environmental science
We formally assess competitive buying and selling behavior in the Australian grains and oilseeds industries using a more realistic empirical model and a less aggregated data set than previously available. We specify a duality model of profit maximization that allows for imperfect competition in both input and output markets and for variable‐proportions technologies. Aggregate input‐output data are used to define the structure of the relevant industries, and time series data are then used to implement the model for 13 grains and oilseeds products handled by seven groups of agents. The model is estimated in a Bayesian econometrics framework. We find evidence of flour and cereal food product manufacturers exerting market power when purchasing wheat, barley, oats and triticale; beer and malt manufacturers exerting market power when purchasing wheat and barley; and other food product manufacturers exerting market power when purchasing wheat, barley, oats and triticale. [EconLit citations: C11, L66, Q11]. © 2007 Wiley Periodicals, Inc. Agribusiness 23: 349–376, 2007.