Market Power in the European Dairy Industry

L. ČechuraZ. Žáková KroupováH. Hockmann


No 4/2015, December
pp. 39-47

Čechura, L., Žáková Kroupová and Z., Hockmann, H. (2015) “Market Power in the European Dairy Industry”, AGRIS on-line Papers in Economics and Informatics, Vol. 7, No. 4, pp. 39 - 47, ISSN 1804-1930.

Abstract

The paper presents an analysis of market power in the output milk-processing market. In particular, the paper identifies market failures in the output milk-processing market in 24 EU member states. The analysis is based on a mark-up model and the application of stochastic frontier methodology. The results show that market failures are pronounced on the EU output milk-processing market. However, the abuse of oligopoly market power is not large on average, despite the fact that we can find significant differences among the countries. The mark-up distribution is skewed toward lower values. That is, the majority of companies are characterized by only a small or almost no degree of market power; however, there are companies (about 10 %) with considerably high oligopoly market power.

Keywords

Milk, market power, oligopoly, SFA, European Union.

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