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Estimating Market Power by Retailers in a Dynamic Framework: the Italian PDO Cheese Market
Author(s) -
Sckokai Paolo,
Soregaroli Claudio,
Moro Daniele
Publication year - 2013
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.2012.00368.x
Subject(s) - market power , imperfect competition , upstream (networking) , downstream (manufacturing) , context (archaeology) , competition (biology) , supply chain , power (physics) , imperfect , supply and demand , economics , microeconomics , market share , industrial organization , business , market structure , marketing , computer science , physics , quantum mechanics , monopoly , computer network , paleontology , ecology , linguistics , philosophy , biology
Abstract In this article, we evaluate the role of market power by retailers within the supply chain of Parmigiano Reggiano (PR) and Grana Padano (GP), the two most famous Italian quality cheeses. Market power is analysed in the context of a dynamic imperfect competition model of the supply chain, in which retailers are allowed to exert market power both downstream and upstream. We jointly estimate market‐power parameters together with supply and demand elasticities, by means of a structural system of demand, supply and price‐transmission equations, estimated using the generalised method of moments. We find evidence of downstream market power by retailers (toward final consumers) for PR and GP, but no evidence of upstream market power (toward processors/ripeners). These results may be explained by the structure of the supply chain and by the peculiar characteristics of the two cheeses.