Open AccessOligopsony power in agricultural market: the case of the Lithuanian raw milk market
Author(s) -
Aldona Stalgienė,
Andrej Jedik
Publication year - 2015
Publication title -
management theory and studies for rural business and infrastructure development
Language(s) - English
Resource type - Journals
eISSN - 2345-0355
pISSN - 1822-6760
DOI - 10.15544/mts.2015.11
Subject(s) - lithuanian , raw milk , business , market power , raw material , agriculture , product (mathematics) , agribusiness , industrial organization , dairy industry , agricultural economics , empirical research , commerce , economics , agricultural science , market economy , food science , ecology , philosophy , linguistics , chemistry , geometry , mathematics , organic chemistry , environmental science , biology , monopoly , epistemology
As the milk in Lithuania produces by a lot of milk producers, who sell their product to several customers (several large dairy processors), a hypothesis appears, that Lithuanian raw milk sector is oligopsonic. In this case, the price is not determined by the product producer, but by the buyers. This situation is typical for many agricultural products in food supply chain. This study aims to determine the market power of the Lithuanian milk processing industry on the market of raw milk. An empirical analysis is based on the New Empirical Industrial Organization (NEIO) market power models. Empirical research has showed that there was an oligopsony (0.28) in the Lithuanian raw milk market.