Volume 23, Issue 1

We provide empirical evidence to explain the apparent discrepancy between consumption choices and voting outcomes for a recent high-profile animal welfare case: California’s ban of eggs produced with caged hens. The model juxtaposes the private good aspect of buying decisions with the public good aspect of voting, and yields testable propositions for the vote-buy gap. These implications are evaluated in a revealed-preferences setting using a novel combination of voting and egg-purchase data. Results show that the vote-buy gap depends on the egg price differential, and the distribution of consumers’ heterogeneous preference for animal welfare issues.

In this paper we investigated the dynamic of competition in the U.S. broiler chicken industry from 2000 to 2023, focusing on the detection and the implications of alleged collusive behaviour. By employing a structural econometrics approach, we estimated the conjectural elasticities, offering an explanation for how potential collusive arrangements evolved over time. Our most important results show that the alleged collusion period elevated the conjectural elasticities for all defendants but increased the conjectural elasticity of the group of three largest publicly traded broiler companies the most. These results suggest that the industry tacit collusion could have morphed into explicit collusion, with the largest three firms being the likely leaders of the conspiracy. In addition, the computed Lerner indexes show that the market power has increased during the collusion period relative to the pre-collusion period and remained elevated afterwards, suggesting stubborn impact of collusion on competition even during the post collusion period.

This research analyzes the U.S. pork industry dynamics in light of the alleged output price-fixing cartel of the largest pork processors revealed in the antitrust lawsuits filed by pork buyers beginning in 2018. The empirical evidence may suggest that pork production, the farm, wholesale, and retail values of pork, and marketing margins increased, but the farm sector share decreased in the cartel period (2009–2019), as compared with the pre-cartel period (1998–2008). The wholesale pork pricing by pork processors is consistent with oligopoly pricing in both the pre-cartel and cartel periods. While the estimated decrease in cost pass-through between these two periods may reflect an increase in the seller (oligopoly) market power of pork processors in the cartel period, this cost pass-through decrease is not statistically significant from zero. The retail pork pricing by food retailers is consistent with perfectly competitive pricing in both the pre-cartel and cartel periods.

The present study investigates the linkages among the futures prices of feeder cattle, live cattle and lean hogs in the US. This has been pursued using a flexible methodology that allows modelling price relationships at different parts of their joint distribution. Data are daily closing prices for the period between 1/1/2015 and 12/31/2023. According to the empirical results: i) livestock commodities boom together and crash (with one exception) together, ii) extreme price decreases are transmitted with higher intensity compared to extreme price increases, iii) transmission asymmetries in prices, between livestock commodities, can occur at the tails as well as at the median of the joint distributions. Lastly, opportunities for speculators to profit from the spread between the commodities of feeder cattle and live cattle can be present.

The U.S. Supreme Court case, Horne v. Department of Agriculture , dealt with the legality of volume controls in the raisin industry. Marketing orders and volume controls in agricultural markets have a long history in the United States and have often been used to decrease price volatility. However, some have seen these volume controls as engaging in cartel behavior. Using a Cournot model, this paper shows that volume controls used by agricultural marketing orders can be profit reducing under some conditions. If producers anticipate a restriction in the production that is allowed to go into the market on a prorated basis, initial production may increase, which can lower profits. Counter intuitively, volume controls can even increase the quantity sold in the market and lower the price.

A common form of cooperation in rural areas corresponds to informal alliances in which farmers save productive costs, for example, by sharing inputs, machinery, and information. By reducing costs cooperatively, these alliances contribute to agricultural land management by increasing efficiency. Despite the benefits, these alliances are typically formed by a small number of farmers. Some researchers attribute this lack of participation to distrust. To model this type of cooperation, this article extends the traditional Network of Collaboration approach which has traditionally been developed in an oligopolistic context. While oligopoly is a type of market structure that can exists in agriculture, most of the farmers who participate in informal cooperation are small enterprises suggesting that the price-taking assumption is a more realistic description for these farmers. We use this market structure extension to show that profit-maximising farmers consider the positive impact of cost reduction; the negative impact of distrust; and the expected gain in output when joining new informal alliances. As such, recommendations are provided to integrate these three factors to facilitate the formation of beneficial informal network alliances in the rural landscape and their positive externality in agricultural land management.