Social and Behavioral Sciences Commons^™

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Testing Oligopolistic And Oligopsonistic Behaviour: An Application To The U.S. Meat-Packing Industry, Azzeddine Azzam, Emilio Pagoulatos

Azzeddine Azzam

This paper extends the conjectural approach in industrial organization to the analysis of imperfections in output and factor markets. Starting from the specification of a production function, the econometric analysis is based on the formulation and estimation of a simultaneous-equation model consisting of production function, first-order conditions associated with factor employment, and two conjectural elasticities to parameterize the industry's oligopoly and oligopsony equilibria. As an example, we provide and application to the U.S. meat-packing industry. Our results suggest that the industry exercises market power in both the output (meat) market and the factor (live animal) market.

Competitive Oil Prices And Scarcity Rents When The Extraction Cost Function Is Convex, Ujjayant N. Chakravorty, James Roumasset

Ujjayant Chakravorty

The relationship between the time path of equilibrium prices and scarcity rents in the case of exhaustible resources depends on the nature of the extraction cost function. This paper examines the characteristics of the resource price path and scarcity rents when the extraction cost function is increasing and convex - a shape that seems to predominate in empirical work, especially in the case of oil. Scarcity rents eventually decline and the competitive price path inflects at the point where the scarcity rents stop rising. The theory is illustrated by using realistic cost and demand estimates from the oil industry.