Inventory Constraints in a Dynamic Model of Imperfect Competition: An Application to Beef Packing

Hunnicutt Lynn and David Aadland ()
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Hunnicutt Lynn: Department of Economics, Utah State University, Logan, Utah, USA

Journal of Agricultural & Food Industrial Organization, 2003, vol. 1, issue 1, 24

Abstract: This paper incorporates inventory dynamics into a standard conjectural variations analysis of market power. Using a model which incorporates closed-loop equilibrium strategies, we show that measures of market power that ignore inventory dynamics are biased. We then apply the model to the beef-packing industry using annual data on cattle stocks, slaughter and prices from 1933-1999. Our estimates suggest that static measures overestimate the amount of market power exerted by beef-packing firms.

Keywords: market power; conjectural variations; inventory dynamics (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (5)

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DOI: 10.2202/1542-0485.1023

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