Information pooling and collusion: an empirical analysis

Azzam, Azzeddine; Salvador, Santiago

doi:10.1016/j.infoecopol.2003.10.003

Cited by 8 publications

(3 citation statements)

References 4 publications

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“…However, they are not in agreement on the MPR's impact on price transmission asymmetry and imperfect competition in downstream markets. While some studies argue the improved transparency due to the MPR led to more collusion in downstream markets and therefore potentially more the “rockets and feathers” effect (Njoroge, ; Njoroge et al., ), others find no evidence of such changes (Azzam & Salvador, ; Cai, Stiegert, & Koontz, ; Ward, ).…”

Section: Resultsmentioning

confidence: 99%

“…In contrast, Njoroge () finds that the MPR can encourage the collusion among packers. Azzam and Salvador () apply a squared sales test, proposed by Jin (), to packers’ slaughter output and test whether information pooling under the MPR could lead to the collusion. They find that the MPR does not lead to collusion in the Nebraska cattle market, while it has a neutral impact in the other four regional markets.…”

Section: Review Of Previous Studiesmentioning

confidence: 99%

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Impact of the livestock mandatory reporting act on the vertical price transmission within the beef supply chain

2017

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This study examines the characteristics of price transmission along the vertical linkage in the beef industry before and after the implementation of the Mandatory Price Reporting Act (MPR) using econometric procedures such as the Gregory-Hansen structural break test, threshold autoregressive model, threshold error correction model, and nonlinear impulse response functions. Results show the improved speed of price adjustment after the MPR in the supply chain of the beef industry, whereas a limited evidence of the increased price asymmetry is detected. The increased asymmetry is observed mostly through the long-run regime switching coefficients of threshold autoregressive and error correction models. The price asymmetry mostly disappears in both pre-and post-MPR periods when only short-and long-run price adjustment coefficients are considered. The results also suggest the existence of the threshold cointegration in the vertical price relationship of the beef industry, which supports the use of the nonlinear threshold model in this study.[JEL codes: C22, Q11] INTRODUCTIONFarm, wholesale, and retail prices in the U.S. beef industry may not be discovered simultaneously; rather, there may be a lead-lag relationship among these prices. The lead-lag relationship could be caused by physical constraints in transporting livestock and slaughtered products, and retailers' and packers' exertion of market power in controlling prices.The vertical price relationship could also be influenced by the availability and access to the market information. As uncertainty about market supply and demand increases, individual transactions of market players tend to further deviate from actual current market clearing conditions. Typically, market information encompasses all information needed by buyers and sellers to arrive at their decision, and buyers and sellers need timely access to relevant information. Price is one such crucial market information.The collection and dissemination of price information could be affected by the recent structural changes in the U.S. beef industry. As the beef industry has been increasingly concentrated, there has been an apprehension 562

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Section: Resultsmentioning

confidence: 99%

Section: Review Of Previous Studiesmentioning

confidence: 99%

Impact of the livestock mandatory reporting act on the vertical price transmission within the beef supply chain

2017

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“…The purpose of this paper is to add to the literature an analysis of the short run and long run dynamics of the industry as a system containing farm, wholesale and retail sector pricing mechanisms. Azzam and Salvador (2004) is the only other known work that has looked at the introduction of information pooling as a result of The Livestock Mandatory Reporting Act. They test for collusion across five regions of the US and suggest evidence of non-collusive behaviour in the State of Nebraska but inconclusive evidence in other States.…”

Section: Introductionmentioning

confidence: 99%

The Livestock Mandatory Reporting Act: Has Information Pooling Led to Anticompetitive Behaviour in the US Beef Industry?

Bugg

2005

SSRN Journal

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Cointegration analysis has been used to assist the testing for price delineation in antitrust and merger cases as a way of deepening econometric evidence. This paper examines the impact of the Livestock Mandatory Reporting Act (1999) instigated in 2001. By addressing the industry as a cointegrated system containing retail, wholesale and farm prices, short run and long run relationships were examined. Cointegration analysis between farm, wholesale and retail sectors suggests that the wholesale sector plays an important role within system. The econometric estimations find that long run wholesale pricing is weakly exogenous whilst farm and retail prices follow the same trend. This finding suggests that it may be as a result of market inefficiency and calls for further analysis of the role that the wholesale sector plays within the industry.

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Market and Welfare Effects of the U.S. Livestock Mandatory Reporting Act

Njoroge¹,

Yiannaka

Giannakas

et al. 2007

Southern Economic Journal

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This paper analyzes the market and welfare effects of the United States Livestock Mandatory Reporting Act enacted in 2001. The act mandates meat packers to report their transactions daily to a government agency and requires the agency to make a summary of those transactions available to the public through the Mandatory Livestock Meat Market News Reports. Considering the case of an imperfect packer cartel that uses trigger price strategies, this paper examines the impact of market information provided by the reports on equilibrium livestock slaughter and the welfare of the groups involved and identifies the determinants of the socially optimal level of information. A key result of the paper is that, even when facilitating collusion among packers, increased market information can be social welfare enhancing.

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Information pooling and collusion: an empirical analysis

Cited by 8 publications

References 4 publications

Impact of the livestock mandatory reporting act on the vertical price transmission within the beef supply chain

Impact of the livestock mandatory reporting act on the vertical price transmission within the beef supply chain

The Livestock Mandatory Reporting Act: Has Information Pooling Led to Anticompetitive Behaviour in the US Beef Industry?

Market and Welfare Effects of the U.S. Livestock Mandatory Reporting Act

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