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Changes in Beef Packers' Market Power after the Livestock Mandatory Price Reporting Act: An Agent-based Auction

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  • Christopher N. Boyer
  • B. Wade Brorsen

Abstract

Controversy remains about the effectiveness of the 1999 Livestock Mandatory Price Reporting Act (MPRA). We determine the likely changes in beef packers' market power after the MPRA by using an agent-based, first-price common-value auction. Past research has employed Cournot models, but we use an auction model, which more closely resembles the actual cattle procurement process. We find that feeders benefit from the MPRA regardless of whether price uncertainty decreases for packers and/or feeders. If the packers' price uncertainty is reduced, the feeder benefits from an increase in competition between the packers. If the feeder's price uncertainty is reduced, the feeder benefits from imposing more accurate reserve prices. Copyright 2013, Oxford University Press.

Suggested Citation

  • Christopher N. Boyer & B. Wade Brorsen, 2013. "Changes in Beef Packers' Market Power after the Livestock Mandatory Price Reporting Act: An Agent-based Auction," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(4), pages 859-876.
    • Handle: RePEc:oup:ajagec:v:95:y:2013:i:4:p:859-876
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    File URL: http://hdl.handle.net/10.1093/ajae/aat005
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    Cited by:

    1. Kumse, Kaittisak & Suzuki, Nobuhiro & Sato, Takeshi, 2018. "Measuring Oligopsony Power in Thai Jasmine Rice Market; Re-evaluating the Paddy Pledging Program," 2018 Annual Meeting, August 5-7, Washington, D.C. 274198, Agricultural and Applied Economics Association.
    2. Brorsen B. Wade & Fain James R. & Maples Joshua G., 2018. "Alternative Policy Responses to Increased Use of Formula Pricing," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 16(1), pages 1-11, January.
    3. Dimitrios Panagiotou, 2019. "Market Power Effects of the Livestock Mandatory Reporting Act in the U.S. Meat Industry: a Stochastic Frontier Approach Under Uncertainty," Journal of Industry, Competition and Trade, Springer, vol. 19(1), pages 103-122, March.
    4. Utomo, Dhanan Sarwo & Onggo, Bhakti Stephan & Eldridge, Stephen, 2018. "Applications of agent-based modelling and simulation in the agri-food supply chains," European Journal of Operational Research, Elsevier, vol. 269(3), pages 794-805.
    5. Marten Graubner & Richard J. Sexton, 2023. "More competitive than you think? Pricing and location of processing firms in agricultural markets," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(3), pages 784-808, May.
    6. Joseph, Kishore & Garcia, Philip & Peterson, Paul E., 2016. "Does the Boxed Beef Price Inform the Live Cattle Futures Price?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236166, Agricultural and Applied Economics Association.
    7. Scott W. Fausti & Zhiguang Wang & Bashir A. Qasmi & Matthew A. Diersen, 2014. "Risk and marketing behavior: pricing fed cattle on a grid," Agricultural Economics, International Association of Agricultural Economists, vol. 45(5), pages 601-612, September.
    8. Christopher Boyer & B. Brorsen, 2014. "Implications of a Reserve Price in an Agent-Based Common-Value Auction," Computational Economics, Springer;Society for Computational Economics, vol. 43(1), pages 33-51, January.
    9. Ramsey, Austin F. & Goodwin, Barry K., 2024. "A Different 'Law of One Price:' Missouri's Livestock Marketing Law of 1999," 2024 Annual Meeting, July 28-30, New Orleans, LA 343679, Agricultural and Applied Economics Association.
    10. Simon Pröll & Heidelinde Grüneis & Franz Sinabell, 2022. "Market Concentration, Producer Organizations, and Policy Measures to Strengthen the Opportunities of Farmers for Value Addition—Empirical Findings from the Austrian Meat Supply Chain Using a Multi-Met," Sustainability, MDPI, vol. 14(4), pages 1-18, February.
    11. Christopher N. Boyer & Charles C. Martinez & Joshua G. Maples & Justin Benavidez, 2023. "Price ranges from fed cattle negotiated cash sales," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(3), pages 1659-1671, September.
    12. Kopp, Thomas & Salecker, Jan, 2020. "How traders influence their neighbours: Modelling social evolutionary processes and peer effects in agricultural trade networks," Journal of Economic Dynamics and Control, Elsevier, vol. 117(C).
    13. Thomas Kopp & Jan Salecker, 2018. "Modelling Social Evolutionary Processes and Peer Effects in Agricultural Trade Networks: the Rubber Value Chain in Indonesia," Papers 1811.11476, arXiv.org.
    14. Graubner, Marten & Sexton, Richard J., 2023. "More competitive than you think? Pricing and location of processing firms in agricultural markets," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 105(3), pages 784-808.
    15. Chanjin Chung & Johnna Rushin & Prasanna Surathkal, 2018. "Impact of the livestock mandatory reporting act on the vertical price transmission within the beef supply chain," Agribusiness, John Wiley & Sons, Ltd., vol. 34(3), pages 562-578, June.
    16. Rao Fu & Chenguang Li & Liming Wang, 2021. "Market Power in the Irish Beef Processing Industry," Sustainability, MDPI, vol. 13(11), pages 1-18, June.
    17. Kalyn Coatney & Jesse Tack, 2014. "The Impacts of an Antitrust Investigation: A Case Study in Agriculture," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(4), pages 423-441, June.
    18. Kopp, T. & Salecker, J., 2018. "Identifying Influential Traders by Agent Based Modelling," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277130, International Association of Agricultural Economists.

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