Market Concentration in the U.S. Beef Supply Chain: Welfare Implications Under Shocks

Angana Chatterjee, Ajit Khanal, William McWilliams and Anubhab Gupta

No 404624, 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri from Agricultural and Applied Economics Association

Abstract: This paper studies how intermediary’s market power changes the welfare effects of tariffs in agricultural markets. We extend the Flexible Oligopoly–Oligopsony Model (FOOM) to an open economy where processors buy from domestic and foreign farmers, combine inputs through an Armington CES aggregator, and exercise market power in both input and output markets. We calibrating the model to the U.S. beef supply chain and find three major results. Market power dominates the welfare picture, costing roughly an order of magnitude more than any plausible tariff. The textbook welfare-improving tariff disappears at empirically estimated meatpacker market power; the optimal tariff falls to zero and becomes a welfare loss beyond it. Tariff incidence shifts from foreign farmers under competition to domestic consumers under concentration. These results indicate that antitrust enforcement and trade policy are not separable interventions in concentrated agricultural markets.

Keywords: Industrial; Organization (search for similar items in EconPapers)
Pages: 39
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea26:404624

DOI: 10.22004/ag.econ.404624

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