Market Power and Supply Shocks: Evidence from the Orange Juice Market

Honglin Wang (), Qing Xiang and Thomas Reardon

No 11508, Staff Paper Series from Michigan State University, Department of Agricultural, Food, and Resource Economics

Abstract: The orange juice market is a "weather market" because of its high geographical concentration and the natural characteristics of orange trees. A few hours of a freeze in Florida is enough to cause a supply shock to the orange juice market. How do oligopolistic firms react to supply shocks - do they become more collusive or more competitive? This paper empirically examines the proposition and finds that the level of market power of orange juice firms decreases significantly, and the market becomes more competitive during supply shocks even though prices rise.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 21
Date: 2006
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:midasp:11508

DOI: 10.22004/ag.econ.11508

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