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Full-Text Articles in Industrial Organization
Market Power Versus Cost-Efficiency Under Uncertainty: Conventional Versus Islamic Banking In The Gcc, Azzeddine Azzam, Belaid Rettab
Market Power Versus Cost-Efficiency Under Uncertainty: Conventional Versus Islamic Banking In The Gcc, Azzeddine Azzam, Belaid Rettab
Azzeddine Azzam
No abstract provided.
Trade Bans, Imperfect Competition, And Welfare: Bse And The U.S. Beef Industry, Dimitrios Pangiotou, Azzeddine Azzam
Trade Bans, Imperfect Competition, And Welfare: Bse And The U.S. Beef Industry, Dimitrios Pangiotou, Azzeddine Azzam
Azzeddine Azzam
Between May 2003 and July 2005, the U.S. beef industry faced a total ban on Canadian cattle imports following the discovery of BSE in Canada in May 2003 and restrictions on U.S. beef exports following the discovery of BSE in the United States in December 2003. When the United States reopened its border to Canadian cattle in July 2005, shipments were restricted to cattle less than 30 months of age. The total ban on Canadian cattle imports and restrictions on U.S. beef exports overlapped between January 2004 and July 2005. The restrictions on Canadian cattle imports and U.S. beef exports …
Market And Welfare Effects Of The U.S. Livestock Mandatory Reporting Act, Kenneth Njoroge, Amalia Yiannaka, Azzeddine Azzam, Konstantinos Giannakas
Market And Welfare Effects Of The U.S. Livestock Mandatory Reporting Act, Kenneth Njoroge, Amalia Yiannaka, Azzeddine Azzam, Konstantinos Giannakas
Azzeddine Azzam
This paper analyzes the market and welfare effects of the United States Livestock Mandatory Reporting Act enacted in 2001. The act mandates meat packers to report their transactions daily to a government agency and requires the agency to make a summary of those transactions available to the public through the Mandatory Livestock Meat Market News Reports. Considering the case of an imperfect packer cartel that uses trigger price strategies, this paper examines the impact of market information provided by the reports on equilibrium livestock slaughter and the welfare of the groups involved and identifies the determinants of the socially optimal …
Vertical Economies And The Structure Of U.S. Hog Farms, Azzeddine Azzam, Cari Skinner
Vertical Economies And The Structure Of U.S. Hog Farms, Azzeddine Azzam, Cari Skinner
Azzeddine Azzam
Scale economies are often touted as the factor behind the trend in the structure of the U.S. hog industry toward fewer and larger hog farms. However, since hog production is multistage and farms either integrate or separate the stages, the appropriate measures are multistage economies. In theory, a smaller and, presumably, high-cost operation, by the standards of single stage/output scale economies, may still be cost-competitive if it enjoys multistage economies--that is if vertical scope economies more than offset stage-specific scale diseconomies. Whether that holds in practice remains heretofore unexplored in the agricultural economics literature. Using a unique data set on …
Anti-Corporate Farming Laws And Industry Structure: The Case Of Cattle Feeding, John Schroeter, Azzeddine Azzam, David Aiken
Anti-Corporate Farming Laws And Industry Structure: The Case Of Cattle Feeding, John Schroeter, Azzeddine Azzam, David Aiken
Azzeddine Azzam
Nine midwestern states have laws that restrict the involvement of publicly held corporations in agriculture. Opponents argue that the laws' direct efforts to regulate ownership structure may have an adverse indirect impact on size structure. Restricting corporate involvement might stifle the emergence and growth of efficient, large-scale establishments if corporations have advantages over other organizational forms in meeting capital requirements. Since 1982, Nebraska has had an anti-corporate farming law that prohibits corporate ownership of feedlots. We test whether the implementation of the Nebraska law had an impact on the stochastic process governing the evolution of the state's feedlot size distribution.
Imperfect Competition And Total Factor Productivity Growth, Azzeddine Azzam, Elena Lopez, Rigoberto Lopez
Imperfect Competition And Total Factor Productivity Growth, Azzeddine Azzam, Elena Lopez, Rigoberto Lopez
Azzeddine Azzam
This article examines the role of imperfect competition in determining total factor productivity growth (TFPG) by bringing together a New Empirical Industrial Organization (NEIO) model and the TFPG model of Good, Nadiri and Sickles (1999). Application of the integrated model to 1973-1992 data from 29 food processing industries revealed that, overall, changes in markups, economies of scale, and demand growth contributed positively to TFPG while the disembodied technical change was a negative contributor. Furthermore, the factors underlying the TFPG estimates are interactive and their net effects are starkly different from the conventional Solow (1957) residual TFPG measures, underscoring the need …
Market Transparency And Market Structure: The Livestock Mandatory Reporting Act Of 1999, Azzeddine Azzam
Market Transparency And Market Structure: The Livestock Mandatory Reporting Act Of 1999, Azzeddine Azzam
Azzeddine Azzam
The premise of the Livestock Mandatory Reporting Act of 1999 is that enhanced transparency promotes competition. This article provides a theoretical study of the consequences of such transparency for the structure, conduct, and performance of the livestock industry. I conclude that the usefulness of the Act to the livestock industry may not be in the value of reported information to feeders, as the supporters of the Act claim. Rather, by forcing packers to pool information at negligible marginal cost, the Act may foster more competitive conduct in the procurement of livestock.
Market Power And/Or Efficiency: A Structural Approach, Azzeddine Azzam, Rigoberto Lopez, Liron-Espana Cameron
Market Power And/Or Efficiency: A Structural Approach, Azzeddine Azzam, Rigoberto Lopez, Liron-Espana Cameron
Azzeddine Azzam
This article separates oligopoly-power and cost-efficiency effects of changes in industrial concentration and assesses their impact on output prices in 32 food-processing industries. Empirical results indicate that although concentration induces cost efficiency in one-third of the industries, oligopoly-power effects either dominate cost efficiency or reinforce inefficiency, resulting in higher output prices in most industries. The article also provides fresh econometric estimates of oligopoly power and economies of size for the industries in question.
Measuring Market Power In Bilateral Oligopoly: The Wholesale Market For Beef, John Schroeter, Azzeddine Azzam, Mingxia Zhang
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 …
Testing For Vertical Economies Of Scope: An Example From Us Pig Production, Azzeddine Azzam
Testing For Vertical Economies Of Scope: An Example From Us Pig Production, Azzeddine Azzam
Azzeddine Azzam
A firm operating in two or more stages of production is said to have vertical economies of scope if the costs of jointly producing two or more vertically adjacent products is less than the costs of producing the products independently. As important as those economies are in theory, they have so far received no empirical treatment compared to scope economies in multi-output production, especially in agriculture. This paper tests for vertical economies of scope in US pig production, using 1990 firm-level cost data. Based on the Wilcoxon matched-pairs signed-rank test, no evidence of vertical economies was found, meaning that it …
Captive Supplies, Market Conduct, And The Open-Market Price, Azzeddine Azzam
Captive Supplies, Market Conduct, And The Open-Market Price, Azzeddine Azzam
Azzeddine Azzam
In this paper, the author examines the anatomy of the price captive-supplies relationship to ascertain if some of the interpretations offered in the empirical literature are defensible. B. L. Gardner's one-product, two-input model is extended to consider a partially integrated oligopsonistic industry. The main result is that, although the empirical relationship between captive supplies and the price received by independent producers is negative, it may or may not be attributed to noncompetitive conduct. Hence, for an econometric model to detect what type of conduct the relationship reflects, more structural detail is needed than what so far has been provided in …
Competition In The Us Meatpacking Industry: Is It History?, Azzeddine Azzam
Competition In The Us Meatpacking Industry: Is It History?, Azzeddine Azzam
Azzeddine Azzam
The U.S. meatpacking industry has become concentrated to a degree not experienced since the days of the 'Beef trust' a century ago. A number of mainstream studies have investigated if such concentration has been detrimental to competition. Just as earlier studies may have helped shape competition policy towards meatpacking a century ago, contemporary studies have made their way into current discussions and may shape competition policy at the turn of this century. This paper asks whether or not contemporary studies are useful in informing competition policy. After comparing how competition looks from the econometric vantage point with how it looks …
Measuring Market Power And Cost-Efficiency Effects Of Industrial Concentration, Azzeddine Azzam
Measuring Market Power And Cost-Efficiency Effects Of Industrial Concentration, Azzeddine Azzam
Azzeddine Azzam
In this paper, the author shows how E. Appelbaum's framework for testing price-taking behavior in a single industry can be formally extended to consider concentration explicitly. In so doing, he separates the market power effect of concentration from its cost-efficiency effect. Data from the U.S. beef-packing industry are used to illustrate an empirical application of the model. The findings support oligopsonistic market power and slaughter-cost efficiency in the industry. However, the cost-efficiency effect outweighs the market-power effect.
Testing The Monopsony-Inefficiency Incentive For Backward Integration, Azzeddine Azzam
Testing The Monopsony-Inefficiency Incentive For Backward Integration, Azzeddine Azzam
Azzeddine Azzam
In theory, monopsony at one stage in a vertically related market provides an incentive for backward integration into the adjacent competitive stages. By integrating backward, a monopsonist internalizes the monopsony inefficiency due to underemployment of the factor produced upstream. However, little is known about the importance of such incentive in practice. In this paper, the author provides an empirically implementable model to test the monopsony-inefficiency incentive for vertical integration. For illustration, the model is applied to the U.S. beef slaughter industry. Findings seem to support the monopsony-inefficiency incentive for backward integration by the industry into the live cattle market.
The Tradeoff Between Oligopsony Power And Cost Efficiency In Horizontal Consolidation: An Example From Beef Packing, John Schroeter, Azzeddine Azzam
The Tradeoff Between Oligopsony Power And Cost Efficiency In Horizontal Consolidation: An Example From Beef Packing, John Schroeter, Azzeddine Azzam
Azzeddine Azzam
In this paper, the authors model the trade-off between regional oligopsony power and cost efficiency resulting from consolidation in a food processing industry. The model can be used to calculate the cost reductions necessary to offset the anticompetitive effects of market power and to compare them to actual cost savings achieved through plant scale or multiplant operating economies. For an application, the authors choose the beef packing industry. For this case, they find that the estimated cost savings necessary to neutralize the anticompetitive effects of consolidation in beef packing are about half the actual cost savings from scale economies.
Markdown Pricing And Cattle Supply In The Beef Packing Industry, Kyle Stiegert, Azzeddine Azzam, Wade Brorsen
Markdown Pricing And Cattle Supply In The Beef Packing Industry, Kyle Stiegert, Azzeddine Azzam, Wade Brorsen
Azzeddine Azzam
The authors determine the effect of anticipated and unanticipated cattle supply on the departure of fed cattle price from cattle's marginal value product. Results indicate fed cattle were priced significantly below their marginal value during thirty-one of the fifty-nine quarters between 1972 II and 1986 IV. When unanticipated supply shocks are small, markdown behavior is consistent with the hypothesis that packers follow an average processing cost pricing rule. One implication of the authors' results is that reducing industry concentration is not likely to lead to changes in cattle prices predicted by structure-conduct-performance-based studies of the industry.
Marketing Margins, Market Power, And Price Uncertainty, John Schroeter, Azzeddine Azzam
Marketing Margins, Market Power, And Price Uncertainty, John Schroeter, Azzeddine Azzam
Azzeddine Azzam
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 for 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 …
Testing Oligopolistic And Oligopsonistic Behaviour: An Application To The U.S. Meat-Packing Industry, Azzeddine Azzam, Emilio Pagoulatos
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.