Changes in Beef Packers' Market Power after the Livestock Mandatory Price Reporting Act: An Agent‐based Auction. (6th March 2013)

• Record Type: Journal Article
• Authors: Boyer, Christopher N.; Brorsen, B. Wade
• Is Part Of: American journal of agricultural economics. Volume 95:Number 4(2013)
• Page Start: 859
• Page End: 876
• Publication Date: 2013-03-06
• Subjects: agent-based model -- collusion -- common value auction -- mandatory price reporting; Agriculture -- Economic aspects -- Periodicals; Agriculture -- Periodicals; 338.105
• DOI: 10.1093/ajae/aat005
• Languages: English
• ISSNs: 0002-9092

Abstract

Abstract : Controversy remains about the effectiveness of the 1999 Livestock Mandatory Price Reporting Act (MPRA). We determine the likely changes in beef packers' market power after the MPRA by using an agent‐based, first‐price common‐value auction. Past research has employed Cournot models, but we use an auction model, which more closely resembles the actual cattle procurement process. We find that feeders benefit from the MPRA regardless of whether price uncertainty decreases for packers and/or feeders. If the packers' price uncertainty is reduced, the feeder benefits from an increase in competition between the packers. If the feeder's price uncertainty is reduced, the feeder benefits from imposing more accurate reserve prices.