Identification of Market Power in the Hungarian Dairy Industry: A Plant-Level Analysis

Perekhozhuk, Oleksandr; Hockmann, Heinrich; Bakucs, Lajos Zoltán; Fertő, Imre

doi:10.1515/jafio-2012-0005

Cited by 20 publications

(14 citation statements)

References 21 publications

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“…In addition, recent studies suggest that the role of IIT has been increasing in agricultural trade for both developed and developing countries (e.g., Leitão, ; Rasekhi and Shojaee, ; Varma, ; Wang, ). Moreover, recent studies confirm the existence of market power in the pork and dairy sectors in Hungary (Bakucs et al., ; Hockmann and Vöneki, ; Perekhozhuk et al., ).…”

Section: Introductionmentioning

confidence: 79%

Drivers of vertical intra-industry trade: the case of the Hungarian agri-food sector

Fertő

Jámbor

2014

Agricultural Economics

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This article investigates the drivers of vertical intra‐industry trade (VIIT) in Hungarian agri‐food trade with the European Union (EU). It identifies three possible ways to measure intra‐industry trade (IIT) flows (GHM, FF, and N methods) and defines six hypotheses to test for the drivers of VIIT with three panel data models (static, dynamic, and FEVD). The results suggest that factor endowments are negatively, while economic size is positively and significantly related to VIIT. Distance and VIIT were found to be negatively related as is commonly the case in the standard gravity model. It was also found that VIIT is greater if a New Member State (NMS) is exporting agri‐food produce to an NMS, while EU accession has ambiguously influenced the share of VIIT. In general, it seems that our results are independent from model estimations and interestingly they do not differ considerably as we a priori expected. Moreover, our results seem surprisingly robust across various measurements of ITT.

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Section: Introductionmentioning

confidence: 79%

Drivers of vertical intra-industry trade: the case of the Hungarian agri-food sector

Fertő

Jámbor

2014

Agricultural Economics

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“…Firstly, one could test directly the impact of market power by estimating a large number of country, sector or even processing plant/retail unit specific production and supply functions (e.g. Azzam and Pagoulatos , Bakucs et al ., or more recently Perekhozuk et al ., using plant level data), followed by the determination of sector‐ and country‐specific market power parameters (theta), later used as a regressor explaining PT. Secondly, a simpler approach is to use concentration ratios of downstream levels industries as proxies for market power included as regressors explaining price transmission (e.g.…”

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confidence: 99%

Does Market Structure Influence Price Transmission in the Agro‐food Sector? A Meta‐analysis Perspective

Bakucs¹,

Fałkowski²,

Fertő³

2013

J Agricultural Economics

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There exists a large literature on price transmission in agro‐food sectors. However, a great majority of empirical studies focus on the existence of asymmetry and, by and large, do not investigate the reason for its presence or absence. This is in sharp contrast to the theoretical literature that provides a number of explanations of why we should expect (a)symmetry. In response, this paper investigates the reasons for asymmetric price transmission in the agro‐food chain, using meta‐analysis of existing studies. Our focus is on the organizational and institutional characteristics of the agro‐food supply chain. Our findings suggest that asymmetric price transmission in farm–retail relationships is more likely to occur in sectors/countries with more fragmented farm structure, higher governmental support and more restrictive regulations on price controls in the retail sector. On the other hand, more restrictive regulations on entry barriers in the retail sector and the relative importance of the sector tend to promote symmetric farm–retail price transmission. The latter is also more likely in the presence of a strong processing industry.

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“…Moreover, using plant‐level data, Morrison Paul () and Perekhozhuk et al . () detected evidence for the presence of oligopsony power at the firm level.…”

Section: Review Of Empirical Studies Of Market Power In the Agricultumentioning

confidence: 99%

“…The majority of investigations involved estimating the degree of oligopoly and/or oligopsony power in markets for meat products (beef and pork) and livestock (cattle and hogs). Some studies were conducted in food, textile and tobacco manufacturing industries (Appelbaum, ; Lopez, ; Bhuyan and Lopez, ), in the dairy industry (Gohin and Guyomard, ; Chidmi et al ., ; Hockmann and Vöneki, ; Mérel, ; Perekhozhuk et al ., ; Perekhozhuk et al ., ), in grain and oil industries (O'Donnell et al ., ), in horticulture markets (Deodhar and Sheldon, ; Deodhar and Sheldon, ; Wann and Sexton, ), in coffee (Lopez and You, ; Bettendorf and Verboven, ) and tea markets (Weerahewa, ), in the pulp and paper industries (Bergman and Brännlund, ) and one study each in the sugar (Genesove and Mullin, ) and fish industries (Steen and Salvanes, ).…”

Section: Review Of Empirical Studies Of Market Power In the Agricultumentioning

confidence: 99%

Approaches and Methods for the Econometric Analysis of Market Power: A Survey and Empirical Comparison

Perekhozhuk

Glauben

Grings

et al. 2016

Journal of Economic Surveys

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This study discusses two widely used approaches in the New Empirical Industrial Organization (NEIO) literature and examines the strengths and weaknesses of the Production-Theoretic Approach (PTA) and the General Identification Method (GIM) for the econometric analysis of market power in agricultural and food markets. We provide a framework that may help researchers to evaluate and improve structural models of market power. Starting with the specification of the approaches in question, we compare published empirical studies of market power with respect to the choice of the applied approach, functional forms, estimation methods and derived estimates of the degree of market power. Thereafter, we use our framework to evaluate several structural models based on PTA and GIM to measure oligopsony power in the Ukrainian dairy industry. The PTA-based results suggest that the estimated parameters of oligopsony power are significantly different from zero, while GIM-based results do not indicate any evidence of oligopsony market power in the Ukrainian dairy industry. Moreover, estimations results vary substantially due to the employed estimation procedure.Recent decades and years have been characterized by comprehensive advancements in various fields of economics, for example the recent developments in the application of theoretical and empirical concepts of NEIO. These advancements comprise, among others, the introduction of new and more flexible functional forms in econometric analysis and newly developed system estimation methods, particularly nonlinear full information methods. Given these developments, empirical studies of market power have become more sophisticated and provide new possibilities of using time-series and cross-sections data sets. These developments allow, for example, the extension of empirical models, which enables researchers to more precisely analyse and evaluate the degree of market power.A rather large number of studies are available in this research area dealing with a wide range of countries, markets or industries. Moreover, these studies are based on different information bases, that is, different aggregation levels, and employ different data frequencies and market structure models. Table 1 provides a detailed overview of existing market structure models in the field of agricultural and food markets focusing on homogenous products, and compares them with respect to their choice of functional forms, estimation methods and estimates of the degree of market power. 2 In total, 38 studies are included in the review, arranged by author's name in alphabetical order.Most empirical studies of market power have been conducted based on empirical data from developed countries such as Australia, Canada, France, Germany, and the United States.Within the empirical studies listed in Table 1, special attention has been paid to the examination of market power in beef packing industries (Schroeter). The majority of investigations involved estimating the degree of oligopoly and/or oligopsony power in markets for mea...

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Identification of Market Power in the Hungarian Dairy Industry: A Plant-Level Analysis

Cited by 20 publications

References 21 publications

Drivers of vertical intra-industry trade: the case of the Hungarian agri-food sector

Drivers of vertical intra-industry trade: the case of the Hungarian agri-food sector

Does Market Structure Influence Price Transmission in the Agro‐food Sector? A Meta‐analysis Perspective

Approaches and Methods for the Econometric Analysis of Market Power: A Survey and Empirical Comparison

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