Price behavior in a dynamic oligopsony: Washington processing potatoes

Timothy Richards, P. M. Patterson, R. N. Acharya

Research output: Contribution to journalArticlepeer-review

24 Scopus citations

Abstract

Punishment strategies are necessary to sustain a collusive oligopsony in a repeated game context when demand is uncertain and only market variables are observable. This article proposes a test for tacit collusion among potato processors in Washington state using a dynamic regime-switching model estimated with a finite mixture method. The results support the existence of punishment and collusive regimes and show the welfare losses due to anti-competitive behavior on the part of processors to be significant. Processors' oligopsony power is enhanced by higher domestic production, imports, and existing stocks, but it is ameliorated by high capacity utilization rates and exports.

Original languageEnglish (US)
Pages (from-to)259-271
Number of pages13
JournalAmerican Journal of Agricultural Economics
Volume83
Issue number2
DOIs
StatePublished - May 2001

Keywords

  • Collusion
  • Dynamic game
  • Mixture estimation
  • Oligopsony
  • Potatoes
  • Trigger strategy

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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