Marketing Margins, Market Power, and Price Uncertainty

John Schroeter and Azzeddine Azzam

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: This paper provides a conceptual and empirical framework for analyzing marketing margins in a noncompetitive food-processing industry facing output price uncertainty. The framework allows the decomposition of observed margins into components reflecting the marginal cost of the processing industry, oligopoly/oligopsony price distortions, and an output price risk component. The empirical procedure is applied to a time series of spreads between wholesale pork prices and farm prices of market hogs. The principal finding is that, while farm/wholesale margins are more consistent with competitive performance now than they were fifteen years ago, the output price risk component persisted throughout the sample period.

Date: 1991-11-01
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Published in American Journal of Agricultural Economics, November 1991, vol. 73 no. 4, pp. 990-999

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Journal Article: Marketing Margins, Market Power, and Price Uncertainty (1991)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:11110

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