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Structural change and market power in the U.S. food manufacturing sector

Author

Listed:
  • Kyle W. Stiegert

    (Department of Agricultural and Applied Economics, University of Wisconsin-Madison, Madison, WI 53706)

  • Shinn-Shyr Wang

    (Department of Resource Economics, University of Massachusetts-Amherst, Amherst, MA 01003)

  • Richard T. Rogers

    (Department of Resource Economics, University of Massachusetts-Amherst, Amherst, MA 01003)

Abstract

This study develops an intertemporally linked market model to explore the relationships between price-cost margins, market concentration, and advertising outlay. The study used data from 48 four-digit SIC (standardized industrial classification) codes for the Food and Tobacco Processing Industries during the 1970s, 1980s, and 1990s. The authors' findings provide evidence that both high and low levels of performance provide signals to industries to consolidate, but for obvious and different reasons. Further, increased consolidation leads to increased entry barriers (advertising) and higher profits to the industry. Our findings are supportive of both Chicago and Traditionalist Schools of thought about antitrust enforcement: Neither emerges in a dominant position. Endogeneity issues and findings within the intertemporal structure cast considerable doubt about overly simplistic structure-performance paradigms of firm behavior. [JEL Code: L11, L40, L66]. © 2009 Wiley Periodicals, Inc.

Suggested Citation

  • Kyle W. Stiegert & Shinn-Shyr Wang & Richard T. Rogers, 2009. "Structural change and market power in the U.S. food manufacturing sector," Agribusiness, John Wiley & Sons, Ltd., vol. 25(2), pages 164-180.
    • Handle: RePEc:wly:agribz:v:25:y:2009:i:2:p:164-180
    DOI: 10.1002/agr.20193
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    References listed on IDEAS

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    3. McCafferty, Michael & Bhuyan, Sanjib, 2012. "An analysis of market power in the U.S. brewing industry: A Simultaneous Equation Approach," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124675, Agricultural and Applied Economics Association.
    4. Fabio R. Chaddad & Mario P. Mondelli, 2013. "Sources of Firm Performance Differences in the US Food Economy," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(2), pages 382-404, June.
    5. Radovan Kastratoviæ & Dragan Lonèar & Siniša Miloševiæ, 2019. "Market concentration and profitability: the empirical evidence from Serbian manufacturing industry," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 37(1), pages 213-233.
    6. Boehlje, Michael & Roucan-Kane, Maud & Broring, Stefanie, 2011. "Future Agribusiness Challenges: Strategic Uncertainty, Innovation and Structural Change," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 14(5), pages 1-29, December.
    7. Sanjib Bhuyan, 2014. "Visiting an old battleground in empirical industrial organization: SCP versus NEIO," Applied Economics Letters, Taylor & Francis Journals, vol. 21(11), pages 751-754, July.

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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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