IDEAS home Printed from https://ideas.repec.org/a/wly/agribz/v17y2001i1p59-79.html
   My bibliography  Save this article

An assessment of the impact of food industry market power on U.S. consumers

Author

Listed:
  • Richard J. Sexton

    (Department of Agricultural and Resource Economics, University of California, Davis, Davis, California 95616)

  • Mingxia Zhang

    (Department of Agricultural and Resource Economics, University of California, Davis, Davis, California 95616)

Abstract

Rapidly increasing concentration in food manufacturing and retailing has heightened concern about the exercise of market power by food manufacturers and retailers to the detriment of farm producers and consumers. Although market power in the food industry has been studied rather extensively, prior analyses have focused on the exercise of selling power, either by manufacturers or retailers. This study develops a simple but flexible model of a food market channel to study both buyer (oligopsony) and seller (oligopoly) power, and the potential impacts of successive market power at multiple stages of the market channel on the magnitude and distribution of economic welfare. Simulation results show that even modest market power can enable the food marketing sector to capture large shares of the market surplus. Efficiency (deadweight) losses, however, tend to be rather small unless the level of market power is high or if market power is exercised at multiple stages of the channel. [Econ-Lit citations: L13, Q13] © 2001 John Wiley & Sons, Inc.

Suggested Citation

  • Richard J. Sexton & Mingxia Zhang, 2001. "An assessment of the impact of food industry market power on U.S. consumers," Agribusiness, John Wiley & Sons, Ltd., vol. 17(1), pages 59-79.
    • Handle: RePEc:wly:agribz:v:17:y:2001:i:1:p:59-79
    DOI: 10.1002/1520-6297(200124)17:1<59::AID-AGR1003>3.0.CO;2-D
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    References listed on IDEAS

    as
    1. Richard T. Rogers & Richard J. Sexton, 1994. "Assessing the Importance of Oligopsony Power in Agricultural Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(5), pages 1143-1150.
    2. Gasmi, F & Laffont, J J & Vuong, Q, 1992. "Econometric Analysis of Collusive Behavior in a Soft-Drink Market," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(2), pages 277-311, Summer.
    3. Mingxia Zhang, 1997. "The Effects of Imperfect Competition on the Size and Distribution of Research Benefits," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1252-1265.
    4. Sanjib Bhuyan & Rigoberto A. Lopez, 1997. "Oligopoly Power in the Food and Tobacco Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 1035-1043.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Irz, Xavier & Mazzocchi, Mario & Réquillart, Vincent & Soler, Louis-Georges, 2015. "Research in Food Economics: past trends and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 187-237, March.
    2. Sexton, Richard J. & Sheldon, Ian M. & McCorriston, Steve & Wang, Humei, 2004. "Analyzing Vertical Market Structure And Its Implications For Trade Liberalization," 2004 Annual meeting, August 1-4, Denver, CO 20060, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Alston, Julian M. & Sexton, Richard J. & Zhang, Mingxia, 1999. "Imperfect competition, functional forms, and the size and distribution of research benefits," Agricultural Economics, Blackwell, vol. 21(2), pages 155-172, October.
    4. Ani L. Katchova & Ian M. Sheldon & Mario J. Miranda, 2005. "A dynamic model of oligopoly and oligopsony in the U.S. potato-processing industry," Agribusiness, John Wiley & Sons, Ltd., vol. 21(3), pages 409-428.
    5. Zhang, Mingxia & Sexton, Richard J., 2000. "Optimal Commodity Promotion In Imperfectly Competitive Markets," 2000 Annual meeting, July 30-August 2, Tampa, FL 21823, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Goddard, Ellen W. & Shank, Benjamin & Panter, Chris & Nilsson, Tomas K.H. & Cash, Sean B., 2007. "Canadian Chicken Industry: Consumer Preferences, Industry Structure and Producer Benefits from Investment in Research and Advertising," Project Report Series 52088, University of Alberta, Department of Resource Economics and Environmental Sociology.
    7. Zhang, Mingxia & Sexton, Richard J. & Alston, Julian M., 2002. "Does Branded Food Product Advertising Help Or Hurt Farmers?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(2), pages 1-25, December.
    8. Alessandro Bonanno & Carlo Russo & Luisa Menapace, 2018. "Market power and bargaining in agrifood markets: A review of emerging topics and tools," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 6-23, December.
    9. Alexandre Gohin & Hervé Guyomard, 2000. "Measuring Market Power for Food Retail Activities: French Evidence," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 181-195, May.
    10. Ian Sheldon & Richard Sperling, 2003. "Estimating the Extent of Imperfect Competition in the Food Industry: What Have We Learned?," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 89-109, March.
    11. Putsis, William P., Jr., 1998. "Empirical Analysis of Competitive Interaction in Food Product Categories," Research Reports 25221, University of Connecticut, Food Marketing Policy Center.
    12. Michael K. Wohlgenant & Nicholas E. Piggott, 2003. "Distribution of gains from research and promotion in the presence of market power," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 301-314.
    13. Raper, Kellie Curry & Love, H. Alan, 1999. "MONOPSONY POWER IN MULTIPLE INPUT MARKETS: A Nonparametric Approach," Staff Paper Series 11656, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    14. Çakır, Metin & Nolan, James, 2015. "Revisiting Concentration in Food and Agricultural Supply Chains: The Welfare Implications of Market Power in a Complementary Input Sector," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(2), pages 1-17, May.
    15. John C. Beghin & Barbara El Osta & Jay R. Cherlow & Samarendu Mohanty, 2003. "The Cost Of The U.S. Sugar Program Revisited," Contemporary Economic Policy, Western Economic Association International, vol. 21(1), pages 106-116, January.
    16. Bonnet, Céline & Requillart, Vincent, 2010. "Is The Eu Sugar Policy Reform Likely To Increase Obesity?," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116414, European Association of Agricultural Economists.
    17. Dongling Huang & Christian Rojas & Frank Bass, 2008. "What Happens When Demand Is Estimated With A Misspecified Model?," Journal of Industrial Economics, Wiley Blackwell, vol. 56(4), pages 809-839, December.
    18. 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.
    19. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    20. Philip G. Gayle & Zijun Luo, 2015. "Choosing between Order-of-Entry Assumptions in Empirical Entry Models: Evidence from Competition between Burger King and McDonald's Restaurant Outlets," Journal of Industrial Economics, Wiley Blackwell, vol. 63(1), pages 129-151, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:agribz:v:17:y:2001:i:1:p:59-79. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.