Umeå Economic Studies, Department of Economics, Umeå University
No 721:
Market Power Effects of Supply Control and Dairy Market Deregulation
Thomas Jonsson ()
Abstract: This paper uses the Bresnahan-Lau framework to analyze
whether policy reforms specifically affecting Swedish dairy cooperatives,
i.e. the two-price system (an input quota, 1986-1991) and the general
deregulation of dairy policy (1991-1994), had any market power effects on
the Swedish butter market. It is hypothesized that the two-price system
enhanced market power, while the deregulation, making exports of butter
less profitable, led to a lower level of market power exercised by dairy
cooperatives. To account for non-stationary variables, a dynamic error
correction model is adopted. The results show that the null hypotheses of
no market power effect, for either of the two reforms, cannot be rejected
at any reasonable significance level.
Keywords: agricultural policy; cooperatives; market power; (follow links to similar papers)
JEL-Codes: L22; L51; L66; Q11; Q18; (follow links to similar papers)
22 pages, November 2, 2007
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