Collusion and Price Behavior in the U.S. Pork Industry

Abstract

Abstract This research analyzes the U.S. pork industry dynamics in light of the alleged output price-fixing cartel of the largest pork processors revealed in the antitrust lawsuits filed by pork buyers beginning in 2018. The empirical evidence may suggest that pork production, the farm, wholesale, and retail values of pork, and marketing margins increased, but the farm sector share decreased in the cartel period (2009–2019), as compared with the pre-cartel period (1998–2008). The wholesale pork pricing by pork processors is consistent with oligopoly pricing in both the pre-cartel and cartel periods. While the estimated decrease in cost pass-through between these two periods may reflect an increase in the seller (oligopoly) market power of pork processors in the cartel period, this cost pass-through decrease is not statistically significant from zero. The retail pork pricing by food retailers is consistent with perfectly competitive pricing in both the pre-cartel and cartel periods.