An Empirical Analysis of Pricing in the U.S. Broiler and Pork Industries

Abstract

During the recent decade a group of large meat processors in the U.S. broiler and pork industries implemented a series of production control practices at various stages of the broiler and pork supply chains. Direct and indirect buyers of broilers and pork filed class action antitrust lawsuits alleging that by implementing these production control practices the meat processors engaged in unlawful conspiracies with the purpose of fixing, increasing, and stabilizing prices of broilers and pork and thus violated Section 1 of the Sherman Act. The research presented in the paper conducts an econometric analysis of price behavior in the U.S. broiler and pork industries during the periods of alleged price-fixing cartels and prior (more competitive) periods. The empirical evidence presented in the paper suggests the following. The wholesale pricing of pork by pork processors is consistent with an oligopoly pricing during both the pre-cartel and cartel periods. The retail pricing of pork by food retailers is consistent with a perfectly competitive pricing during both analyzed periods. The retail pricing of broilers by food retailers is consistent with a monopoly pricing during the pre-cartel period and with a monopoly and an oligopoly pricing during the cartel period.