Contract Pricing and Packer Competition in Fed Cattle Market

Moon-Soo Park, H. Love and Yanhong H. Jin

No 21356, 2006 Annual meeting, July 23-26, Long Beach, CA from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: We use a game-theoretical framework to analyze the coexistence of spot and contract markets in the cattle industry. A duopsony scenario with two packers and N feeders is used to reflect the reality in the cattle industry. Our main contribution is to incorporate the risk components and the pricing of hedonic attributes of cattle quality. Our preliminary results show that packers have an incentive to transform bidding strategies in spot markets when a series of hedonic characteristics play some significant roles in establishing cattle prices in contract market. That is, we will show that the effectiveness of contract with TOMP clauses on packer competition in a spot market depends on whether there is a correlation between spot price and hedonic characteristics. The results may shed light on understanding potential effects of captive supplies on market power and may aid in the assessment of the policies designed to enhance competition in the cattle industry.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 17
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/21356/files/sp06pa04.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea06:21356

DOI: 10.22004/ag.econ.21356

Access Statistics for this paper

More papers in 2006 Annual meeting, July 23-26, Long Beach, CA from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().