Input and Output Market Power with Non-neutral Productivity: Livestock and Labor in U.S. Meatpacking

Azzeddine Azzam, Jordi Jaumandreu and Rigoberto Lopez

No 17785, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Identification of firm input and output market power requires unbiased estimation of production elasticities. We propose a method that is robust to biased technological change and apply it with panel data on plants in the highly concentrated U.S. meatpacking industry, which is often suspected of exploiting livestock farmers and meatpacking workers. Inference can be checked by assessing how much each market contributes to gross profits. We reject the exercise of market power in the livestock market but find that some firms exploit their share of local employment to set wages with an important markdown and exercise some product market power.

Keywords: market; power (search for similar items in EconPapers)
Date: 2023-01
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