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Market Power in Poultry Production Contracting? Evidence from aFarm Survey

Published online by Cambridge University Press:  26 January 2015

James M. MacDonald  and
Nigel Key
James M. MacDonald
Affiliation:
Economists, Economic Research Service, U.S. Department of Agriculture., Washington, D.C.
Nigel Key
Affiliation:
Economists, Economic Research Service, U.S. Department of Agriculture., Washington, D.C.
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Abstract

The exercise of market power by broiler processing firms (integrators) isplausible because local markets for growers are concentrated and becausegrowers face hold-up risks arising from substantial investments in specificassets set against limited integrator purchase commitments. This articleexplores the links between local integrator concentration and growercompensation under production contracts using data from the 2006 broilerversion of the USDA's Agricultural Resource Management Survey. Results ofthis study, which account for characteristics of the operation and specificfeatures of the production contract, suggest that greater integratorconcentration results in a small but economically meaningful reduction ingrower compensation.

Keywords

broilersmarket powermonopsonyoligopsonypoultryproduction contractsL11L13Q12
Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 44 , Issue 4 , November 2012 , pp. 477 - 490
Copyright
Copyright © Southern Agricultural Economics Association 2012

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