Abstract
This study examines the impact of channel concentration on retail prices in the traditional cheese market of Cyprus. The analysis is based on a panel data model for retail prices and a non-linear simultaneous equations model for the estimation of market power. Our results suggest that retail cheese prices tend to be positively related to producer concentration and negatively related to channel concentration. We provide explanations for these results based on the structure-conduct-performance and countervailing buyer power models in published industrial organization studies.
References
Arnade, C., G. Munisamy, and D. Pick. 2007. “Measuring the Degree of Retail Competition in the U.S. Cheese Market.” Journal of Agricultural and Food Industrial Organization 5 (1): Article 1: 1–18.10.2202/1542-0485.1151Search in Google Scholar
Arnade, C., G. Munisamy, and D. Pick. 2008. “Brand Inertia in U.S. Household Cheese Consumption.” American Journal of Agricultural Economics 90: 813–26.10.1111/j.1467-8276.2008.01176.xSearch in Google Scholar
Bhargava, A., L. Franzini, and W. Narendranathan. 1983. “Serial Correlation and the Fixed Effects Model.” Review of Economic Studies 49: 533–49.10.1142/9789812773319_0004Search in Google Scholar
Bresnahan, T. F. 1982. “The Oligopoly Solution Concept Is Identified.” Economics Letters 10: 87–92.10.1016/0165-1765(82)90121-5Search in Google Scholar
Cabral, L. 2000. Introduction to Industrial Organization. Cambridge, MA: The MIT Press.Search in Google Scholar
Cameron, C. A., and P. K. Trivedi. 2005. Microeconometrics. New York: Cambridge University Press.10.1017/CBO9780511811241Search in Google Scholar
Chen, Z. 2003. “Dominant Retailers and the Countervailing Power Hypothesis.” RAND Journal of Economics 34: 612–25.10.2307/1593779Search in Google Scholar
Chipty, T., and C. M. Snyder. 1999. “The Role of Firm Size in Bilateral Bargaining: A Study of the Cable Television Industry.” Review of Economics and Statistics 81: 326–40.10.1162/003465399558111Search in Google Scholar
Dobson, P. W., R. Clarke, S. Davies, and M. Waterson. 2001. “Buyer Power and Its Impact on Competition in the Food Retail Distribution Sector of the European Union.” Journal of Industry, Competition and Trade 1: 247–81.10.1023/A:1015268420311Search in Google Scholar
Dobson, P. W., and M. Waterson. 1997. “Countervailing Power and Consumer Prices.” Economic Journal 107: 418–30.10.1111/j.0013-0133.1997.167.xSearch in Google Scholar
Dong, D., and H. M. Kaiser. 2005. “Coupon Redemption and Its Effect on Household Cheese Purchases.” American Journal of Agricultural Economics 87: 689–702.10.1111/j.1467-8276.2005.00756.xSearch in Google Scholar
Ellison, S. F., and C. M. Snyder. 2010. “Countervailing Power in Wholesale Pharmaceuticals.” Journal of Industrial Economics 58: 32–53.10.1111/j.1467-6451.2010.00408.xSearch in Google Scholar
Franses, P. H. 2001. Quantitative Models in Marketing Research. Cambridge: Cambridge University Press.10.1017/CBO9780511753794Search in Google Scholar
Galbraith, J. K. 1952. American Capitalism: The Concept of Countervailing Power. Boston, MA: Houghton Mifflin.Search in Google Scholar
Gans, J. S., and S. P. King. 2002. “Exclusionary Contracts and Competition for Large Buyers.” International Journal of Industrial Organization 20: 1363–81.10.1016/S0167-7187(02)00008-5Search in Google Scholar
Giulietti, M. 2007. “Buyer and Seller Power in Grocery Retailing: Evidence From Italy.” Revista de Economia del Rosario 10: 109–25.Search in Google Scholar
Gould, B. W., J. Cornick, and T. Cox. 1994. “Consumer Demand for New Reduced-Fat Foods: An Analysis of Cheese Expenditures.” Canadian Journal of Agricultural Economics 42: 367–80.10.1111/j.1744-7976.1994.tb00031.xSearch in Google Scholar
Harbutt, J. 2009. World Cheese Book: The Finest Selection. New York: Dorling Kindersley Publishing Limited.Search in Google Scholar
Inderst, R., and N. Mazzarotto. 2009. “Buyer Power in Distribution.” In Issues in Law and Policy, Antitrust Law Handbook, edited by W.D. Collins, Chicago: American Bar Association.Search in Google Scholar
Katz, M. L. 1987. “The Welfare Effects of Third Degree Price Discrimination in Intermediate Goods Markets.” American Economic Review 77: 154–67.Search in Google Scholar
Liang, J. N. 1989. “Price Reaction Functions and Conjectural Variations: An Application to the Breakfast Cereal Industry.” Review of Industrial Organization 4: 31–58.10.1007/BF02284668Search in Google Scholar
Merel, P. 2011. “Institutional Market Power in Comte: Insights From a ‘Double Marginalization’ Model.” Journal of Agricultural Economics 62: 585–603.10.1111/j.1477-9552.2011.00301.xSearch in Google Scholar
Michis, A. A. 2014. “Time Scale Evaluation of Economics Forecasts.” Economics Letters 123: 279–81.10.1016/j.econlet.2014.03.002Search in Google Scholar
Michis, A. A., and T. Sapatinas. 2007. “Wavelet Instruments for Efficiency Gains in Generalized Method of Moments Models.” Studies in Nonlinear Dynamics and Econometrics 11 (4): Article 4: 1–23.10.2202/1558-3708.1531Search in Google Scholar
Muir, R. 2010. 500 Cheeses. London: Quintet Publishing Limited.Search in Google Scholar
Newey, W. K., and K. D. West. 1987. “A Simple, Positive and Semi-Definite Heteroskedasticity and Autocorrelation Consistent Covariance Matrix.” Econometrica 55: 703–8.10.2307/1913610Search in Google Scholar
Papademas, P., and R. K. Robinson. 1998. “Halloumi Cheese: The Product and Its Characteristics.” International Journal of Dairy Technology 5: 98–103.10.1111/j.1471-0307.1998.tb02646.xSearch in Google Scholar
Parks, R. 1967. “Efficient Estimation of a System of Regression Equations When Disturbances Are Both Serially and Contemporaneously Correlated.” Journal of the American Statistical Association 62: 500–9.10.1080/01621459.1967.10482923Search in Google Scholar
Pepall, L., D. Richards, and G. Norman. 2008. Industrial Organization: Contemporary Theory and Empirical Applications. Cornwall: Blackwell Publishing.Search in Google Scholar
Peracchi, F. 2001. Econometrics. Chichester: John Wiley & Sons.Search in Google Scholar
Raskovich, A. 2003. “Pivotal Buyers and Bargaining Position.” Journal of Industrial Economics 51: 405–26.10.1111/j.0022-1821.2003.00207.xSearch in Google Scholar
Reed, R. W., and H. Ye. 2011. “Which Panel Data Estimator Should I Use?” Applied Economics 43: 985–1000.10.1080/00036840802600087Search in Google Scholar
Rojas, C., N. Lavoie, and S.-S. Wang. 2012. “Buyer Power and Vertically Differentiated Retailers.” Journal of Agricultural and Food Industrial Organization 10 (1): Article 5: 1–26.10.1515/1542-0485.1338Search in Google Scholar
Sckokai, P., C. Soregaroli, and D. Moro. 2013. “Estimating Market Power by Retailers in a Dynamic Framework: The Italian PDO Cheese Market.” Journal of Agricultural Economics 64: 33–53.10.1111/j.1477-9552.2012.00368.xSearch in Google Scholar
Shaffer, S. 1989. “Competition in the U.S. Banking Industry.” Economics Letters 29: 321–23.10.1016/0165-1765(89)90210-3Search in Google Scholar
Sheffman, D. T., and P. T. Spiller. 1992. “Buyers’ Strategies, Entry Barriers, and Competition.” Economic Inquiry 30: 418–36.10.1111/j.1465-7295.1992.tb01972.xSearch in Google Scholar
Snyder, C. M. 1998. “Why Do Large Buyers Pay Lower Prices? Intense Supplier Competition.” Economic Letters 58: 205–9.10.1016/S0165-1765(97)00279-6Search in Google Scholar
Snyder, C. M. 2008. “Countervailing Power.” In The New Palgrave Dictionary of Economics, 2nd edition, edited by S. N. Durlauf and L. E. Blume, London: Palgrave Macmillan.10.1057/978-1-349-95121-5_519-2Search in Google Scholar
Sorensen, A. T. 2003. “Insurer-Hospital Bargaining: Negotiated Discounts in Post-Deregulation Connecticut.” Journal of Industrial Economics 51: 469–90.10.1111/j.0022-1821.2003.00211.xSearch in Google Scholar
Tyagi, R. K. 2001. “Why Do Suppliers Charge Large Buyers Lower Prices?” Journal of Industrial Economics 49: 45–61.10.1111/1467-6451.00137Search in Google Scholar
Verbeek, M. 2012. A Guide to Modern Econometrics. 4th ed. Chichester: John Wiley & Sons Ltd.Search in Google Scholar
Villas-Boas, S. B. 2007. “Vertical Relationships Between Producers and Retailers: Inference with Limited Data.” Review of Economic Studies 74: 625–52.10.1111/j.1467-937X.2007.00433.xSearch in Google Scholar
Wallace, T., and A. Hussain. 1969. “The Use of Error Components in Combining Cross-Section and Time Series Data.” Econometrica 37: 55–72.10.2307/1909205Search in Google Scholar
©2016 by De Gruyter
Articles in the same Issue
- Frontmatter
- Non-Tariff Measures When Alternative Regulatory Tools Can Be Chosen
- Mergers and Acquisitions (M&As), Market Structure and Inventive Activity in the Agricultural Biotechnology Industry
- Measuring Bilateral Market Power in International Markets of Vertically Differentiated Agricultural Commodities
- Testing for Oligopsony Power in the US Green Skin Avocado Market
- Innovation in the Seed Market: The Role of IPRs and Commercialization Rules
- Modeling US Farmer Soybean Seed Choice with Path Dependencies: Inevitable Patented Seed Market Dominance?
- Partial Adherence to Voluntary Quality Standards for Experience Goods
- Investigating the Price Transmission Mechanisms of Greek Fresh Potatoes, Tomatoes and Cucumbers Markets
- Channel Concentration and Retail Prices: Evidence from the Traditional Cheese Market of Cyprus
- Price Dependence between Different Beef Cuts and Quality Grades: A Copula Approach at the Retail Level for the U.S. Beef Industry
- Factors Associated with Alcoholic Beverages Consumption in Russia: A Discrete Choice Model
Articles in the same Issue
- Frontmatter
- Non-Tariff Measures When Alternative Regulatory Tools Can Be Chosen
- Mergers and Acquisitions (M&As), Market Structure and Inventive Activity in the Agricultural Biotechnology Industry
- Measuring Bilateral Market Power in International Markets of Vertically Differentiated Agricultural Commodities
- Testing for Oligopsony Power in the US Green Skin Avocado Market
- Innovation in the Seed Market: The Role of IPRs and Commercialization Rules
- Modeling US Farmer Soybean Seed Choice with Path Dependencies: Inevitable Patented Seed Market Dominance?
- Partial Adherence to Voluntary Quality Standards for Experience Goods
- Investigating the Price Transmission Mechanisms of Greek Fresh Potatoes, Tomatoes and Cucumbers Markets
- Channel Concentration and Retail Prices: Evidence from the Traditional Cheese Market of Cyprus
- Price Dependence between Different Beef Cuts and Quality Grades: A Copula Approach at the Retail Level for the U.S. Beef Industry
- Factors Associated with Alcoholic Beverages Consumption in Russia: A Discrete Choice Model