Cost Economies and Market Power: The Case of the U.S Meat Packing Industry

Catherine Morrison Paul

No 190897, Working Papers from University of California, Davis, Department of Agricultural and Resource Economics

Abstract: Increasing size of establishments and resulting concentration in US industries may stem from various types of cost economies. In particular, scale economies arising from technological factors embodied in plant and equipment may be a driving force for such market structure changes. In this case typical market power measures like Lerner indexes can be misleading; if scale (cost) economies prevail, cost efficiencies rather than market deficiencies may actually underlie the observed patterns. In this study I provide measures of scale economies and market power for the US meat packing industry, where increased consolidation and concentration have raised great concern in policy circles. The results suggest that this trend has been motivated by cost economies, but that little excess profitability exists, and on the margin the potential for taking further advantage of such economies has become minimal.

Keywords: Demand and Price Analysis; Livestock Production/Industries; Marketing (search for similar items in EconPapers)
Pages: 32
Date: 2000-10
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:ucdavw:190897

DOI: 10.22004/ag.econ.190897

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