Oligopsony Power with Uniform Spatial Pricing: Theory and Application to Milk Processing in Spain

Posted: 24 Dec 2000

See all articles by A. M. Alvarez

A. M. Alvarez

Universidad de Oviedo - Facultad de Economicas

Eduardo González Fidalgo

Universidad de Oviedo - Instituto Universitario de la Empresa (IUDE)

Richard J. Sexton

University of California, Davis - Department of Agricultural and Resource Economics

M. Zhang

The California Independent Operator - Market Analysis

Abstract

This study presents a conceptual and empirical analysis of buyer oligopsony power in a spatial markets setting. The conceptual model analyses behaviour in a market with uniform spatial prices and Loeschian conduct. A key result is that firms may set prices above the monopsony level to minimise direct competition among themselves. The empirical analysis focuses on the purchase of milk in the Asturias region of Spain and utilises a panel of firm-level data to study the determinants of milk processors' pricing behaviour. Estimation results strongly support the predictions of the theoretical model.

Keywords: oligopsony, uniform pricing, spatial competition, milk processing

Suggested Citation

Alvarez, A. M. and González Fidalgo, Eduardo and Sexton, Richard J. and Zhang, Mingxia, Oligopsony Power with Uniform Spatial Pricing: Theory and Application to Milk Processing in Spain. Available at SSRN: https://ssrn.com/abstract=244351

A. M. Alvarez

Universidad de Oviedo - Facultad de Economicas

Campus del Cristo, s/n
Oviedo, Asturias 33071
Spain

Eduardo González Fidalgo

Universidad de Oviedo - Instituto Universitario de la Empresa (IUDE) ( email )

González Besada 13, 4 planta
33007 Oviedo
Spain

Richard J. Sexton (Contact Author)

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
327 Voorhies
Davis, CA 95616
United States
530-752-2219 (Phone)

Mingxia Zhang

The California Independent Operator - Market Analysis ( email )

Folsom, CA 95763-9014
United States

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