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Degree of Instant Competition! Estimation of Market Power in India’s Instant Coffee Market

Author

Listed:
  • Satish Y. Deodhar

    (Indian Institute of Management, Vastrapur, Ahmedabad - 380015, India)

  • Vivek Pandey

    (Indian Institute of Management, Vastrapur, Ahmedabad - 380015, India)

Abstract

New competition policy seeks to promote competition and increase market efficiency. In fact, degree of price transmission between farmers and final consumers depends on degree of competition in processing sector. Moreover, trade liberalization policy is expected to influence domestic markets. Hence, it becomes imperative to know the degree of competition in various industries. India's instant coffee market is a duopoly of the firms- Nestlé and Hindustan Lever. We econometrically estimate the degree of competition in this market. Results indicate that market is not characterized by collusive behaviour. It is close to perfect competition although we cannot reject the Cournot-Nash behaviour.

Suggested Citation

  • Satish Y. Deodhar & Vivek Pandey, 2008. "Degree of Instant Competition! Estimation of Market Power in India’s Instant Coffee Market," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 43(2), pages 253-264, December.
    • Handle: RePEc:dse:indecr:v:43:y:2008:i:2:p:253-264
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    5. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057, Elsevier.
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    Cited by:

    1. Juan M. C. Larrosa & Leandro Meller & Juan I. Uriarte & Gonzalo R. Ramírez Muñoz de Toro, 2023. "Retail coffee pricing dynamics in Argentina," SN Business & Economics, Springer, vol. 3(8), pages 1-21, August.
    2. Nguyen Thi Tuoi & Nguyen Phu Son & Pham Le Thong, 2021. "Estimating the Market Power of Traders in the Arabica Coffee Value Chain in Lam Dong, Vietnam," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 7(3), pages 102-108, 09-2021.
    3. Nguyen Thi Tuoi & Nguyen Phu Son & Pham Le Thong, 2022. "Analysis of farmers’ market power in the value chain of Arabica coffee in Lam Dong Province, Vietnam," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 12(1), pages 139-147.
    4. Zhu, Xuehong & Li, Xinyuan & Zhang, Hongwei & Huang, Jianbai, 2019. "International market power analysis of China’s tungsten export market -- from the perspective of tungsten export policies," Resources Policy, Elsevier, vol. 61(C), pages 643-652.

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    More about this item

    Keywords

    Market Power; Instant Coffee Market; Lerner Index; Conjectural Variations; Competition Policy; India;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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