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

Kyle Stiegert (), Shinn-Shyr Wang and Richard T. Rogers
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Shinn-Shyr Wang: Department of Resource Economics, University of Massachusetts-Amherst, Amherst, MA 01003, Postal: 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, Postal: Department of Resource Economics, University of Massachusetts-Amherst, Amherst, MA 01003

Agribusiness, 2009, vol. 25, issue 2, 164-180

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.

Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:25:y:2009:i:2:p:164-180

DOI: 10.1002/agr.20193

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