Applied Economics Teaching Resources

an AAEA Journal

Agricultural and Applied Economics Association

Case Study

Market Power in the U.S. Beef Packing Industry

Yuliya V. Bolotova(a)
(a)Iowa State University

JEL Codes: JEL Codes: L1, L2, L4, L13
Keywords: Beef packing industry, marketing margins, oligopoly, oligopsony, price-fixing

Publish Date: March 19, 2024
Volume 6

View Full Article (PDF) | Request Teaching Notes/Supplemental Materials

Abstract

This case study is motivated by recent developments in the U.S. beef packing industry involving allegations of an illegal exercise of buyer and seller market power by the four largest beef packers in the markets for fed cattle and beef products, respectively. In 2019, fed cattle producers and beef buyers filed class action antitrust lawsuits against these companies alleging that they engaged in an unlawful conspiracy with the purpose of decreasing fed cattle prices and increasing wholesale and retail prices of beef as early as January 2015 and violated Section 1 of the Sherman Act. The case study focuses on applications of economic models that may explain conduct and performance of the beef packing industry using the perspectives of plaintiffs and defendants in the ongoing cattle and beef antitrust litigation. The case study also introduces a basic empirical analysis of beef production, beef values, and marketing margins in the beef supply chain based on publicly available data reported by the U.S. Department of Agriculture. The intended audiences are undergraduate and graduate students. The teaching note summarizes student learning objectives and teaching strategies. It also includes multiple-choice questions, as well as suggested answers and guidance to analytical, discussion, and multiple-choice questions.

About the Authors: Yuliya V. Bolotova is an Assistant Teaching Professor with the Department of Economics at Iowa State University (yuliya@iastate.edu) Acknowledgments: The author acknowledges constructive comments provided by AETR Editor, Jason Bergtold, and two anonymous reviewers.

Copyright is governed under Creative Commons CC BY-NC-SA

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