Variation of market power across different food supply chains

¹ Slovak University of Agriculture in Nitra, Faculty of Economics and Management – Department of Economic Policy. Tr. A. Hlinku 2, 949 76 Nitra, Slovakia
² The University of West Bohemia, Faculty of Economics - Department of Economics and Quantitative Methods. Univerzitni 22, 30614 Pilsen, Czech Republic

^* Corresponding author: derevanikolay@gmail.com

Abstract

Research background: The analysis of the competitiveness between producers, processors and retailers in food supply chains has always been drawing a high level of attention. It has become even more topical issue for researchers and policymakers after the global food crisis in 2008.

Purpose of the article: The goal of this paper is to analyse empirical studies of market power and to investigate if some supply chains are systematically more prone to excessive market power than others.

Methods: For this study, we have collected a wide range of recent studies investigating the processors’ market power index in the food supply chains. In total, in our analysis, we used 472 unique market power index estimates and employed various linear regression models to investigate their determinants.

Findings & Value added: Our findings suggest that, on average, the reported degree of market power in the USA is almost twice as high as in other countries. At the same time, market power estimates related to the meat, dairy and horticulture industries are systematically higher than the ones related to other supply chains. Finally, we observed that, on average, supply chains related to highly perishable products tend to have lower market power estimates associated with them, than other supply chains. Our results have important implications for future investigation of the structural source of market power and unfair trade practices.