Identification of Market Power in Bilateral Oligopoly: The Brazilian Wholesale Market of UHT Milk

Paulo Scalco and Marcelo Braga

No 212278, 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists

Abstract: The aim of this study was to test the hypothesis of market power in the wholesale market for UHT milk. The structure of this market is an oligopoly characterized as bilateral and uses the model proposed by Schroeter et al. (2000), which allows testing the hypothesis of market power without assuming the restrictive hypothesis of price-taking behavior on one side of the market. The system of nonlinear simultaneous equations that determines quantity, wholesale and retail prices of UHT milk was estimated by nonlinear generalized method of moments. Estimation of conduct parameter was 0.638, rejecting the hypothesis of a perfectly competitive market. Evidences suggest that retailers exert oligopsony power on the dairy industry; however, the distortions caused by such market power could not be quantified.

Keywords: Food Consumption/Nutrition/Food Safety; International Development; Marketing (search for similar items in EconPapers)
Pages: 27
Date: 2015
New Economics Papers: this item is included in nep-agr, nep-com and nep-pr~
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae15:212278

DOI: 10.22004/ag.econ.212278

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