Premium
The Collusion‐deterring Effect of Pre‐attributed Supplies and the Hog Auction in Quebec
Author(s) -
Lame Bruno,
Romain Robert,
Gervais JeanPhilippe,
Salha Sami Ben
Publication year - 2000
Publication title -
canadian journal of agricultural economics/revue canadienne d'agroeconomie
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 37
eISSN - 1744-7976
pISSN - 0008-3976
DOI - 10.1111/j.1744-7976.2000.tb00415.x
Subject(s) - collusion , reverse auction , eauction , revenue equivalence , business , microeconomics , multiunit auction , auction theory , mechanism (biology) , dutch auction , economics , industrial organization , price mechanism , common value auction , market price , philosophy , epistemology
The hog/pork industry in Quebec has been going through major institutional changes since 1989, the year an electronic auction was put in place to market all of the hogs in the province. Because the auction's ability to generate high prices did not meet the expectations of hog producers, the pure auction system was replaced by a hybrid one in 1994. In this system, most of the hog supply was pre‐attributed to processors at a negotiated price based on the US. price while the remainder of the provincial supply of hogs was sold through the auction. In this paper, we investigate how a seemingly inefficient marketing mechanism like pre‐attributions can increase the efficiency of a usually efficient mechanism like an auction. We present theoretical arguments regarding the sustainability of collusion under the pure auction and hybrid systems in addition to analyzing auction prices with modern time series tools.