Abstract
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.
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Appendix
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 |
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