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Licensed Unlicensed Requires Authentication Published by De Gruyter February 5, 2020

Testing Market Power and Welfare Effects in the US Catfish Industry

Giap V. Nguyen, Curtis M. Jolly and Thong T. Nguyen


An empirical specification of the conjectural variations model, which conforms to microeconomic theory, is estimated for the US catfish industry. We find the existence of market power exerted by US catfish processors. Processors force the price paid to catfish growers down by 52.88 cent per pound of live catfish, which costs US catfish growers about $300 million a year. US catfish growers can deter the negative effects of processors’ market power by increasing their farm supply flexibility. Further studies are needed to address the dynamics and competitive game strategies in the US catfish industry.

JEL Classification: L11; L13; D43


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A DF test for unit root VS. stationary

Variables Statistical Value 1 % Critical Value 5 % Critical Value 10 % Critical Value
lnQw −3.959 −3.455 −2.877 −2.57
lnPw −2.072 −2.339 −1.65 −1.284
lnGDP −2.205 −2.338 −1.65 −1.284
lnPOP −3.673 −3.987 −3.427 −3.13
lnPmeat 2.736 −2.58 −1.95 −1.62
lnQm −5.604 −3.455 −2.877 −2.57
lnQf −3.652 −3.455 −2.877 −2.57
lnPfeed −2.125 −2.339 −1.65 −1.284
lnPenergy −3.914 −3.988 −3.428 −3.13
lnFarmsize −1.987 −2.339 −1.65 −1.284
Year −9.626 −3.987 −3.427 −3.13
ProcessPrice −2.223 −2.339 −1.65 −1.284
FarmPrice −2.954 −2.339 −1.65 −1.284
Wage −2.182 −2.339 −1.65 −1.284
EnergyPrice −4.419 −3.988 −3.428 −3.13
Interest −2.889 −3.988 −3.428 −3.13
FirmNumber −4.341 −3.987 −3.427 −3.13

B Effects of Oligopsony power on farm market at different farm supply elasticities (ε)

Parameters Unit Farm market ε = 0.5 (Oligopsony) Farm market ε = 1 (Oligopsony) Farm market ε = 2 (Oligopsony)
ΔPrice cent/lb − 36.47 − 18.23 − 9.11
ΔVolume 1000 lb/month − 9,602 − 9,602 − 9,602
ΔCS 1000 $/month 5,956 2,588 904
ΔPS 1000 $/month − 16,431 − 8,215 − 4107
ΔTS 1000 $/month −9,799 −5,627 − 3,202
Revenue 1000 $/month 29,762 29,762 29,762
Published Online: 2020-02-05

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