Industrial Organization Commons^™

Measuring Market Power In Bilateral Oligopoly: The Wholesale Market For Beef, John Schroeter, Azzeddine Azzam, Mingxia Zhang

Azzeddine Azzam

Econometric methods for assessing the degree of market power typically rely on a maintained hypothesis of price-taking behavior on one side of the market or the other. In the analysis of bilateral oligopoly, however, one would like to leave open the question of whether buyers or sellers (or both) behave competitively while allowing for the possible exercise of market power on either side. In this paper, we address the problem of measuring market power in bilateral oligopoly. This requires that we first distinguish among three candidate equilibrium concepts: bilateral price-taking, seller price-taking, and buyer price-taking. Choosing among them comes down …