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Rigidity in Packer-Feedlot Relationships

Published online by Cambridge University Press:  28 April 2015

Lynn Hunnicutt ,
Dee Von Bailey  and
Michelle Crook
Lynn Hunnicutt
Affiliation:
Department of Economics, Pacific Lutheran University, Tacoma, WA
Dee Von Bailey
Affiliation:
Department of Economics, Utah State University, Logan, UT
Michelle Crook
Affiliation:
Department of Economics, Utah State University, Logan, UT
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Abstract

Concentration in beef packing has risen dramatically in the past 25 years. We develop measures used to describe feedlot-packer relations: (1) a statistic based on the proportion of its sales a feedlot makes to a given packer, and (2) a measure of the switching behavior of feedlots. The measures are calculated using a confidential data set from the USDA Grain Inspection, Packers, and Stockyards Administration. Relationships are found to be both exclusive and stable. Causes for this rigidity are then examined using regression analysis. Transaction costs are shown to help explain why this market differs from a perfectly competitive one.

Keywords

beef packingmarket relationshipstransaction costsQ13L14L66
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 36 , Issue 3 , December 2004 , pp. 627 - 638
Copyright
Copyright © Southern Agricultural Economics Association 2004

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