Rigidity in Packer-Feedlot Relationships

Lynn Hunnicutt (), DeeVon Bailey () and Michelle Crook

Journal of Agricultural & Applied Economics, 2004, vol. 36, issue 3, pages 627-638

Abstract: Concentration in beef packing has risen dramatically in the past 25 years. We develop measures used to describe feedlot-packer relations: (1) a statistic based on the proportion of its sales a feedlot makes to a given packer, and (2) a measure of the switching behavior of feedlots. The measures are calculated using a confidential data set from the USDA Grain Inspection, Packers and Stockyards Administration. Relationships are found to be both exclusive and stable. Causes for this rigidity are then examined using regression analysis. Transaction costs are shown to help explain why this market differs from a perfectly competitive one.

Keywords: beef packing; market relationships; transaction costs (search for similar items in EconPapers)
JEL-codes: Q13 L14 L66 (search for similar items in EconPapers)

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Journal of Agricultural & Applied Economics is edited by Jeffrey M. Gillespie

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