IDEAS home Printed from https://ideas.repec.org/a/wly/agribz/v35y2019i1p97-113.html
   My bibliography  Save this article

Market power and food safety in the China pork industry

Author

Listed:
  • Huashu Wang
  • Tian Xia
  • Zhengfei Guan

Abstract

Using data collected from a pork firm survey, we develop a modeling framework and use the conjectural variation method to examine the effect of market power on the food safety of the pork industry in China. Probit models with a two‐step Heckman selection procedure are applied to identify the determinants of the likelihood and degree of food safety violations. Market power is found to reduce the likelihood of violation but not the degree of violation. Other factors such as traceability systems, adoption of risk control systems and industry standards, and the scale and scope of operations also impact food safety violations. Findings suggest that market power in China’s pork industry provides incentives for firms to mitigate risk and improve food safety. However, firms may continue to have challenges in meeting food safety obligations when moving toward mega‐size and product diversification.

Suggested Citation

  • Huashu Wang & Tian Xia & Zhengfei Guan, 2019. "Market power and food safety in the China pork industry," Agribusiness, John Wiley & Sons, Ltd., vol. 35(1), pages 97-113, January.
    • Handle: RePEc:wly:agribz:v:35:y:2019:i:1:p:97-113
    DOI: 10.1002/agr.21591
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/agr.21591
    Download Restriction: no
    File URL: https://libkey.io/10.1002/agr.21591?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Digal, Larry N. & Ahmadi-Esfahani, Fredoun Z., 2002. "Market power analysis in the retail food industry: a survey of methods," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(4), pages 1-26.
    2. Goldsmith, Peter D. & Turan, Nesve A. & Gow, Hamish R., 2003. "Food Safety In The Meat Industry: A Regulatory Quagmire," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 6(1), pages 1-13.
    3. Steve McCorriston, 2002. "Why should imperfect competition matter to agricultural economists?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 29(3), pages 349-371, July.
    4. repec:bla:jindec:v:45:y:1997:i:4:p:377-86 is not listed on IDEAS
    5. Demsetz, Harold, 1982. "Barriers to Entry," American Economic Review, American Economic Association, vol. 72(1), pages 47-57, March.
    6. John M. Antle, 2000. "No Such Thing as a Free Safe Lunch: The Cost of Food Safety Regulation in the Meat Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 310-322.
    7. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    8. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    9. 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.
    10. Schroeter, John R. & Azzam, Azzeddine M., 1990. "Measuring Market Power in Multi-Product Oligopolies: The U.S. Meat Industry," Staff General Research Papers Archive 11112, Iowa State University, Department of Economics.
    11. Daniel F. Spulber, 1989. "Regulation and Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262192756, December.
    12. Peter G. Toumanoff, 1984. "A Positive Analysis of the Theory of Market Failure," Kyklos, Wiley Blackwell, vol. 37(4), pages 529-541, November.
    13. Miller, Richard A, 1969. "Market Structure and Industrial Performance: Relation of Profit Rates to Concentration, Advertising Intensity, and Diversity," Journal of Industrial Economics, Wiley Blackwell, vol. 17(2), pages 104-118, April.
    14. repec:bla:kyklos:v:37:y:1984:i:4:p:529-41 is not listed on IDEAS
    15. Garcia Martinez, Marian & Fearne, Andrew & Caswell, Julie A. & Henson, Spencer, 2007. "Co-regulation as a possible model for food safety governance: Opportunities for public-private partnerships," Food Policy, Elsevier, vol. 32(3), pages 299-314, June.
    16. Cabral, Luis M. B., 1995. "Conjectural variations as a reduced form," Economics Letters, Elsevier, vol. 49(4), pages 397-402, October.
    17. Rhoades, Stephen A, 1973. "The Effect of Diversification on Industry Profit Performance in 241 Manufacturing Industries: 1963," The Review of Economics and Statistics, MIT Press, vol. 55(2), pages 146-155, May.
    18. Azzeddine M. Azzam, 1997. "Measuring Market Power and Cost‐efficiency Effects of Industrial Concentration," Journal of Industrial Economics, Wiley Blackwell, vol. 45(4), pages 377-386, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jianbin Yu & Neal H. Hooker, 2024. "Exploring factors influencing repeated recalls in the US meat and poultry industry," Agribusiness, John Wiley & Sons, Ltd., vol. 40(4), pages 825-845, October.
    2. Huashu Wang & Zhenyi Li & H. Holly Wang, 2022. "Does Backward Integration Improve Food Safety of the Tea Industry in China in the Post-COVID-19 Era?," Sustainability, MDPI, vol. 14(4), pages 1-15, February.
    3. Zengjin Liu & Ning Geng & Zhuo Yu, 2022. "Does a Traceability System Help to Regulate Pig Farm Households’ Veterinary Drug Use Behavior? Evidence from Pig Farms in China," IJERPH, MDPI, vol. 19(19), pages 1-17, September.
    4. Minseong Kang & Byeong‐Il Ahn, 2023. "Market power and cost‐efficiency effects: Broiler packing industry in South Korea," Agribusiness, John Wiley & Sons, Ltd., vol. 39(4), pages 1157-1172, October.

    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. Soregaroli, Claudio & Sckokai, Paolo & Moro, Daniele, 2011. "Agricultural policy modelling under imperfect competition," Journal of Policy Modeling, Elsevier, vol. 33(2), pages 195-212, March.
    2. Sven Anders, 2008. "Imperfect Competition in German Food Retailing: Evidence from State Level Data," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 36(4), pages 441-454, December.
    3. Federica Di Marcantonio & Pavel Ciaian & Vicente Castellanos, 2018. "Unfair trading practices in the dairy farm sector: Evidence from selected EU regions," JRC Research Reports JRC112770, Joint Research Centre.
    4. Evert Los & Cornelis Gardebroek & Ruud Huirne, 2021. "Explaining output price heterogeneity in Dutch horticulture," Agribusiness, John Wiley & Sons, Ltd., vol. 37(4), pages 891-914, October.
    5. 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.
    6. 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.
    7. Klaus Salhofer & Christoph Tribl & Franz Sinabell, 2012. "Market power in Austrian food retailing: the case of milk products," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 39(1), pages 109-122, February.
    8. Campbell, Randall C. & Nagel, Gregory L., 2016. "Private information and limitations of Heckman's estimator in banking and corporate finance research," Journal of Empirical Finance, Elsevier, vol. 37(C), pages 186-195.
    9. López Zapata, Esteban & García Muiña, Fernando Enrique & García, Susana María, 2019. "Analysing the relationship between diversification strategy and firm performance: the role of the economic cycle," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).
    10. Ronchi, Loraine, 2006. "Fairtrade and market failures in agricultural commodity markets," Policy Research Working Paper Series 4011, The World Bank.
    11. Maximilian Klöckner & Christoph G. Schmidt & Stephan M. Wagner, 2022. "When Blockchain Creates Shareholder Value: Empirical Evidence from International Firm Announcements," Production and Operations Management, Production and Operations Management Society, vol. 31(1), pages 46-64, January.
    12. Riillo, Cesare Fabio Antonio & Peroni, Chiara, 2022. "Immigration and entrepreneurship in Europe: cross-country evidence," MPRA Paper 114580, University Library of Munich, Germany.
    13. Juergen Bitzer & Erkan Goeren, 2018. "Foreign Aid and Subnational Development: A Grid Cell Analysis," Working Papers V-407-18, University of Oldenburg, Department of Economics, revised Mar 2018.
    14. Sande, Jon Bingen & Haugland, Sven A., 2015. "Strategic performance effects of misaligned formal contracting: The mediating role of relational contracting," International Journal of Research in Marketing, Elsevier, vol. 32(2), pages 187-194.
    15. Yusen Dong & Pengcheng Ma & Lanzhu Sun & Daniel Han Ming Chng, 2024. "Goodwill Hunting: Why and When Ultimate Controlling Owners Affect Their Firms’ Corporate Social Responsibility Performance," Journal of Business Ethics, Springer, vol. 193(3), pages 535-553, September.
    16. Breunig, Christoph & Mammen, Enno & Simoni, Anna, 2018. "Nonparametric estimation in case of endogenous selection," Journal of Econometrics, Elsevier, vol. 202(2), pages 268-285.
    17. Tang, Ryan W., 2023. "Institutional unpredictability and foreign exit−reentry dynamics: The moderating role of foreign ownership," Journal of World Business, Elsevier, vol. 58(2).
    18. Lachos, Victor H. & Prates, Marcos O. & Dey, Dipak K., 2021. "Heckman selection-t model: Parameter estimation via the EM-algorithm," Journal of Multivariate Analysis, Elsevier, vol. 184(C).
    19. Nan Zhang & Qiaozhuan Liang & Huiying Li & Xiao Wang, 2022. "The organizational relationship–based political connection and debt financing: Evidence from Chinese private firms," Bulletin of Economic Research, Wiley Blackwell, vol. 74(1), pages 69-105, January.
    20. Lynn Hunnicutt & David Aadland, 2002. "Market Power with Dynamic Invertory Constraints: The Bias in Standard Measures," Working Papers 2002-15, Utah State University, Department of Economics.

    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:35:y:2019:i:1:p:97-113. 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.