A Characterization of the Food Industries

Garth J. Holloway

No 170858, 1995 Conference (39th), February 14-16, 1995, Perth, Australia from Australian Agricultural and Resource Economics Society

Abstract: This paper investigates consistency in the context in which conjectural variation have been applied to the food industries. This is a homogeneous-product, quantity-setting model in which firms are identical. Previous contributions in the American Journal of Agricultural Economics use the model in a hybrid form, which is part conjectural variations and part Cournot. Stackelberg (1934) and Leontief (1936) provide the foundations for a pure, conjectural variations approach. When the model is applied in its correct form, the following conclusions are obtained; An identical-finns, restricted-entry equilibrium yields a consistent conjecture. It is the monopolistic conjecture. When entry is endogenous, consistency requires ,firm output to contract with new entry and expand with exit, but there exists no conjecture that is consistent with equilibrium. Consequently, the restricted-entry equilibrium, in which firms have monopolistic conjectures, is unique. It predicts unambiguous grounds for public intervention in the food system, the premise for which should be tested.

Keywords: Food Consumption/Nutrition/Food Safety; Industrial Organization; Marketing (search for similar items in EconPapers)
Date: 1995-02
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aare95:170858

DOI: 10.22004/ag.econ.170858

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