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Information Pooling And Collusion: Implications For The Livestock Mandatory Reporting Act, Kenneth Njoroge

Department of Agricultural Economics: Faculty Publications

This paper develops a conceptual model that analyzes the impact of increasing market transparency under the Livestock Mandatory Reporting Act of 1999 on the incentives for collusion in the U.S. meatpacking industry. More than likely, meatpackers will have asymmetric priors regarding the distribution of livestock prices. Moreover, they lack the incentives to voluntarily reveal their real priors. Thus, the enforcer of the Act faces a problem of asymmetric information regarding the informativeness of publicly disclosed market reports relative to that of packers’ priors. Analytical results predict that divergent priors of Bayesian packers can be updated by more informative market reports, …