Oligopoly in grain production and consumption: an empirical study on soybean international trade in China

Abstract

What has been neglected in much of the existing studies of the influence of seasonal and regional characteristics of agriculture on the market power and national security. This paper constructs a multivariate equations model to investigate the monopoly power of seasonal suppliers and national security in China’s soybean market. The results show no relationship between market share and monopoly power; and that CR3 and HHI show China’s soybean import market has been the highest oligopoly type, but the model suggest that exporters (the U.S., Brazil and Argentina) have very weak monopoly power and China has no monopsony power; and that the performance of some exporters’ soybeans is affected by others, while others are relatively independent in market. This is due to the non-substitutability of the product, the non-substitutability of the buyer and the seller, etc., which causes the mutual dependence of the seller and buyer, and their market power cancel each other out. The seasonality and regionality of soybean production is the root. Considering national security, it is necessary to take the seasonal and regional characteristics of exporters into account to disperse trade risks and oppose monopolisation of international food production and trade.