Estimating Market Power and Pricing Conduct in a Product-Differentiated Oligopoly: The Case of the Domestic Spaghetti Sauce Industry

Steven S. Vickner and Stephen P. Davies

Journal of Agricultural and Applied Economics, 1999, vol. 31, issue 1, 1-13

Abstract: This paper develops a simultaneous-equations panel data econometric model to obtain point estimates of market power and pricing conduct in a representative product-differentiated, oligopolistic food market. The importance of this class of markets is recognized given its prevalence in the food and fiber system, especially for final consumer food products. The $1.3 billion domestic spaghetti sauce industry is featured. Although the results indicate firms exert limited market power, a portion of this power is derived from tacit price collusion. A higher degree of price collusion was found among brands within a market segment than between segments.

Date: 1999
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