Measuring the degree of market power exerted by government trade agencies

The principle of profit maximization is used to derive an equilibrium condition for noncompetitive markets and to provide explicit parametric tests for market power exerted in both domestic and foreign markets by a government trade agency. Our study goes beyond previous work by considering simultane...

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Bibliographic Details
Published in:American journal of agricultural economics 1992-08, Vol.74 (3), p.546-555
Main Authors: Love, H.A. (Texas AandM University), Murniningtyas, E
Format: Article
Language:English
Subjects:
ADMINISTRACION
ADMINISTRATION
Agricultural Economics & Policy
Agriculture
BENEFICE
BLE
Business & Economics
COMERCIO
COMMERCE
COMPETENCIA ECONOMICA
CONCURRENCE ECONOMIQUE
Economics
ELASTICIDAD DE LOS PRECIOS
ELASTICITE DES PRIX
F130
Financial market structures
Foreign trade
Free trade
GANANCIAS
Government departments
IMPORTACIONES
IMPORTATION
Imports
JAPON
Life Sciences & Biomedicine
MARCHE INTERIEUR
Market power
MERCADO INTERIOR
MONOPOLE
MONOPOLIO
Monopoly
Monopsony
new empirical industrial organization
OFERTA Y DEMANDA
OFFRE ET DEMANDE
Q170
Resale
Science & Technology
Social Sciences
Supply
Tariffs
TRIGO
Wheat
wheat trade
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Summary:The principle of profit maximization is used to derive an equilibrium condition for noncompetitive markets and to provide explicit parametric tests for market power exerted in both domestic and foreign markets by a government trade agency. Our study goes beyond previous work by considering simultaneous exertion of market power in both domestic and foreign markets and by jointly estimating market power parameters with cost and demand parameters. These innovations allow nested tests of market power as opposed to prevailing nonnested tests based on simulation models or conditional tests based on prior estimates of demand and cost parameters. Japan is found to exert a high degree of monopsony power in the world wheat market and no monopoly power in the domestic market.
ISSN:0002-9092
1467-8276
DOI:10.2307/1242567