MARKETING MARGINS AND MARKET POWER IN THE AUSTRALIAN DAIRY PROCESSING AND RETAILING SECTORS

Christopher O'Donnell

No 124502, 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand from Australian Agricultural and Resource Economics Society

Abstract: We use a New Empirical Industrial Organisation (NEIO) approach to estimate industry marketing margins for several Australian dairy products. Our model allows for differences in input- and outputmarket conjectural elasticities under the assumption of a fixed proportions production technology. Other assumptions on the production technology include the use of a single agricultural input to produce multiple outputs, and substitutability between agricultural and non-agricultural inputs. Two alternative methods are used to decompose the price of manufacturing milk into the prices of components used to produce different manufacturing milk products. We estimate margins equations for carton milk, wholemilk powder (WMP), butter, cheese and skim-milk powder (SMP) using state-level data. Nonlinear least squares is used to impose a number of inequality constraints implied by economic theory. The results suggest that, in price-deregulated markets, only three market intermediaries possess market power: carton milk retailers possess market power in output markets; carton milk processors possess market power in both input and output markets; and butter processors possess market power in input markets.

Keywords: Agribusiness; Marketing (search for similar items in EconPapers)
Pages: 25
Date: 1999-01
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/124502/files/ODonnell.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:aare99:124502

DOI: 10.22004/ag.econ.124502

Access Statistics for this paper

More papers in 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand from Australian Agricultural and Resource Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().