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Identification of Market Power in the Hungarian Dairy Industry: A Plant-Level Analysis

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  • Perekhozhuk Oleksandr

    (Department of Agricultural Markets, Marketing and World Agricultural Trade, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), Theodor-Lieser-Strasse 2, Halle/Saale 06120, Germany)

  • Hockmann Heinrich

    (Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), Halle/Saale 06120, Germany)

  • Fertő Imre

    (Institute of Economics, Hungarian Academy of Sciences, Budapest, Hungary)

  • Bakucs Lajos Zoltán

    (Institute of Economics, Hungarian Academy of Sciences, Budapest, Hungary)

Abstract

The objective of this paper is to provide an alternative model which can be used to test for oligopsony market power applying plant-level data. For this purpose, we took into account empirical studies and specific developments in the Hungarian dairy industry and specified a model that provides useful benchmarks for an econometric test of market power. The results of the econometric analysis show that the effects from policy changes in Hungary, as well as from plant specific issues are highly statistically significant, and produce evidence suggesting the exercise of oligopsony market power in the Hungarian dairy industry.

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  • Perekhozhuk Oleksandr & Hockmann Heinrich & Fertő Imre & Bakucs Lajos Zoltán, 2013. "Identification of Market Power in the Hungarian Dairy Industry: A Plant-Level Analysis," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 11(1), pages 1-13, January.
    • Handle: RePEc:bpj:bjafio:v:11:y:2013:i:1:p:1-13:n:1
    DOI: 10.1515/jafio-2012-0005
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    2. Daniele Cavicchioli & Luca Cacchiarelli & Alessandro Sorrentino & Roberto Pretolani, 2022. "Should We Cry over the Spilt Milk? Market Power and Structural Change along Dairy Supply Chains in EU Countries," Sustainability, MDPI, vol. 14(8), pages 1-18, April.
    3. Rahman, Mohammad Chhiddikur, 2020. "Welfare Impact of Asymmetric Price Transmission on Bangladesh Rice Consumers," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 242248, January.
    4. Aaron Grau & Heinrich Hockmann, 2018. "Market power in the German dairy value chain," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 93-111, December.
    5. Čechura, Lukáš & Žáková Kroupová, Zdeňka & Hockmann, H., 2015. "Market Power in the European Dairy Industry," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 7(4), pages 1-9, December.
    6. Grau, Aaron Stephan Alexander & Hockmann, Heinrich, 2017. "Estimating oligopsony power on two vertically integrated markets," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261277, European Association of Agricultural Economists.
    7. Cechura, Lukas & Žáková Kroupová, Zdenka & Hockmann, Heinrich, 2015. "Market power in the European dairy industry," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 7(4), pages 39-47.
    8. Cechur, Lukas & Hockmann, Heinrich & Levkovych, Inna, 2015. "Do the EU food processors abuse Oligopsony market power?," 2015 Conference, August 9-14, 2015, Milan, Italy 212043, International Association of Agricultural Economists.
    9. Silva, Bruno Kanieski & Cubbage, Frederick W. & Gonzalez, Ronalds & Abt, Robert C., 2019. "Assessing market power in the U.S. pulp and paper industry," Forest Policy and Economics, Elsevier, vol. 102(C), pages 138-150.
    10. Rahman, Mohammad Chhiddikur, 2018. "Welfare Impact of Asymmetric Price Transmission on Bangladesh Rice Consumers," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 251114, January.
    11. Koppenberg, Maximilian & Hirsch, Stefan, 2020. "Comparing methods for markup estimation with an application to EU food retailing," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304272, Agricultural and Applied Economics Association.
    12. Špička, Jindřich & Kontsevaya, S. R., 2016. "Differences of Financial Management Strategy of Central European and Russian Milk Processors," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 8(1), pages 1-14, March.
    13. Zavelberg, Yvonne & Wieck, Christine & Heckelei, Thomas, 2015. "How can differences in German raw milk prices be explained? An empirical investigation of market power asymmetries," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205489, Agricultural and Applied Economics Association.
    14. Perekhozhuk Oleksandr & Hockmann Heinrich & Fertő Imre & Bakucs Lajos Zoltán, 2013. "Identification of Market Power in the Hungarian Dairy Industry: A Plant-Level Analysis," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 11(1), pages 1-13, January.
    15. Andrea GERGELY & Andrea RÓZSA, 2018. "Investigation Of Equity Risk Premium In Hungarian Food Industry," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 16, pages 7-19, May.
    16. Perekhozhuk, Oleksandr & Chezhia, Giorgi & Glauben, Thomas, 2021. "Measuring Oligopsony Market Power in Kazakh Grain-Processing Industry: Converging Evidence from Two Structural Approaches," 2021 Conference, August 17-31, 2021, Virtual 315345, International Association of Agricultural Economists.
    17. Maximilian Koppenberg & Stefan Hirsch, 2022. "Markup estimation: A comparison of contemporary methods at the example of European food retailers," Agribusiness, John Wiley & Sons, Ltd., vol. 38(1), pages 108-133, January.
    18. Mydland, Ørjan & Størdal, Ståle & Kumbhakar, Subal C. & Lien, Gudbrand, 2022. "Modeling markups and its determinants: The case of Norwegian industries and regions," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 252-262.
    19. Outreville, 2015. "The market structure-performance relationship applied to the Canadian wine industry," Applied Economics Letters, Taylor & Francis Journals, vol. 22(18), pages 1486-1492, December.
    20. Imre Ferto & Attila Jambor, 2015. "Drivers of vertical intra-industry trade: the case of the Hungarian agri-food sector," Agricultural Economics, International Association of Agricultural Economists, vol. 46(1), pages 113-123, January.

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