nep-com New Economics Papers
on Industrial Competition
Issue of 2016‒06‒04
29 papers chosen by
Russell Pittman
United States Department of Justice

  1. On Prices' Cyclical Behaviour in Oligopolistic Markets By L. Lambertini; L. Marattin
  2. Choice of strategic variables by relative profit maximizing firms in oligopoly By Satoh, Atsuhiro; Tanaka, Yasuhito
  3. Retail Market Power in a Shopping Basket Model of Supermarket Competition By Richards, Timothy; Hamilton, Stephen
  4. Do Firms Price and Advertise to Maximize Profits? Evidence from U.S. Food Industries By He, Xi; Lopez, Rigoberto
  5. The Economics of "Radiator Springs:" Industry Dynamics, Sunk Costs, and Spatial Demand Shifts By Jeffrey R. Campbell; Thomas Hubbard
  6. Product differentiation and cost pass-through By Loy, Jens-Peter; Glauben, Thomas
  7. A decomposition model of vertical price transmission with scanner data By Schulze Bisping, Christin; von Cramon-Taubadel, Stephan
  8. Energy Prices, Pass-Through, and Incidence in U.S. Manufacturing By Sharat Ganapati; Joseph S. Shapiro; Reed Walker
  9. Personalized Pricing and Price Fairness By Richards, Timothy; Liaukonyte, Jura; Nadia, Streletskya
  10. Information Exchanges among Firms and Their Welfare Implications (Part ‡V j FPrivate Risks and Oligopoly Models By Yasuhiro Sakai
  11. Patent rights, product market reforms, and innovation By Philippe Aghion; Peter Howitt; Susanne Prantl
  12. Strategic bidding, wind ownership and regulation in a decentralised electricity market By Walsh, Darragh; Malaguzzi Valeri, Laura; Di Cosmo, Valeria
  13. How does renewables competition affect forward contracting in electricity markets? By Robert A. Ritz
  14. Store Choice and Consumer Behavior in Food Deserts: An Empirical Application of the Distance Metric Method By Chenarides, Lauren; Jaenicke, Edward, C.
  15. Private Labels Competition and Retailers Market Power: The Case of Fluid Milk Market in Connecticut By Xuan, Chen; Rabinowitz, Adam; Liu, Yizao
  16. Investigating the US Consumer Response to the Chinese Acquisition of a US Firm By Zhang, Yu Yvette; Palma, Marco A.; Jin, Shaosheng; Yuan, Xiaotong
  17. Impacts of Futures Markets Speculation and Rail Transportation Networks on Commodity Basis Behavior By Woodard, Joshua; Dutta, Tridib; Xue, Lin
  18. Disentangling Supply and Demand Shocks to Identify Changes in the Live Cattle’s Market Structure Post Livestock Mandatory Price Reporting Act By Pozo, Veronica F.; Bejan, Vladimir; Tejeda, Hernan
  19. The economic impact of removing geo-blocking restrictions in the EU Digital Single Market By Nestor Duch-Brown; Bertin Martens
  20. Innovation and Firm Productivity: Evidence from the US Patent Data By Cui, Jingbo; Li, Xiaogang
  21. OPEC vs US shale oil: Analyzing the shift to a market-share strategy By Alberto Behar; Robert A. Ritz
  22. Retail Alcohol Availability and Product Diversity By Ho, Shuay-Tsyr; Qu, Mingyang; Rickard, Bradley; Costanigro, Marco; McLaughlin, Edward
  23. Related variety, ownership, and firm dynamics in transition economies: the case of Hungarian city regions 1996-2012 By Izabella Szakálné Kanóa, Balázs Lengyel, Zoltán Elekes, Imre Lengyel; Balázs Lengyel; Zoltán Elekes; Imre Lengyel
  24. Does bank competition reduce cost of credit? Cross-country evidence from Europe By Fungáčová, Zuzana; Shamshur, Anastasiya; Weill, Laurent
  25. Which Smart Electricity Service Contracts Will Consumers Accept? The demand for compensation in a platform market By Laura-Lucia Richter; Michael G. Pollitt
  26. The hidden side of dynamic pricing in airline markets By Alderighi, Marco; Gaggero, Alberto A; Piga, Claudio A
  28. Heterogeneous Effects of Private Label and Branded Products on Farm-Retail Price Transmission: The Case of the U.S. Fluid Milk Market By Liu, Yizao; Rabinowitz, Adam; Chen, Xuan
  29. Price Discovery and Price Transparency in the U.S. Cheese Industry By Bolotova, Yuliya V.

  1. By: L. Lambertini; L. Marattin
    Abstract: We revisit the discussion about the relationship between price’s cyclical features, implicit collusion and the demand level in an oligopoly supergame where a positive shock may hit demand and disrupt collusion. The novel feature of our model consists in characterising the post-shock noncooperative price and comparing it against the cartel price played in the last period of the collusive path, to single out the conditions for procyclicality to arise both in the short and in the long-run.
    JEL: C73 E60 L13
    Date: 2016–04
  2. By: Satoh, Atsuhiro; Tanaka, Yasuhito
    Abstract: This paper studies the choice of strategic variables by firms in a symmetric oligopoly in which each firm produces differentiated goods and maximizes its relative profit that is the difference between its profit and the average profit of the other firms. We consider a two stage game such that in the first stage the firms choose their strategic variables, quantity or price, and in the second stage they determine the values of their strategic variables. We show that the choice of strategic variables is irrelevant in the sense that the equilibrium quantities and prices are the same in all firms whichever each firm chooses in the first stage, so any combination of strategy choice by the firms constitutes a sub-game perfect equilibrium in the two stage game.
    Keywords: relative profit maximization, oligopoly
    JEL: D43
    Date: 2016–01–01
  3. By: Richards, Timothy; Hamilton, Stephen
    Abstract: Supermarket consumers typically purchase more than one item at a time. Retail prices, in turn, are likely to depend on demand relationships between multiple categories of goods in consumers' shopping baskets. In this paper, we develop a model of retail price competition that explicitly models the effect of complementary demand relationships between products that appear in consumer shopping baskets. We derive inferences for retail market power when shopping baskets contain products from complementary categories and compare outcomes with the predictions derived from conventional models that assume consumers make discrete choices among independent product categories. Our findings reveal that cross-category product complementarity in consumer shopping baskets facilitates substantially greater retail market power relative to the benchmark case of discrete choice over independent goods.
    Keywords: complementarity, retailing, pricing, supermarkets, oligopolies., Industrial Organization,
    Date: 2016
  4. By: He, Xi; Lopez, Rigoberto
    Abstract: Based on a model that incorporates brand entry deterrence through advertising and pricing strategies, this paper investigates whether firms’ advertising and pricing policies deviate from their short-run profit maximization strategies and how advertising and pricing entry deterrence strategies vary with market conditions. We estimate the advertising and pricing response of incumbents to entrants in four food industries: beer, carbonated soft drinks, ready-to-eat cereal and yogurt, and find that incumbents deviate significantly from profit maximization advertising and pricing policies. There is a U-shaped relationship between the potential market share of an entrant and incumbents’ pricing but an inverse U-shape with respect to advertising level. This means that incumbents are more likely to price higher and advertise less to deter entry when potential entrants are more competitive in terms of potential market share. Empirically, we show this to be the case in the four food industries studied.
    Keywords: Incumbents, entrants, food industries, advertising and pricing, Industrial Organization, Marketing, L11, L21, M37,
    Date: 2016
  5. By: Jeffrey R. Campbell; Thomas Hubbard
    Abstract: Interstate Highway openings were permanent, anticipated demand shocks that increased gasoline demand and sometimes shifted it spatially. We investigate supply responses to these demand shocks, using county-level observations of service station counts and employment and data on highway openings' timing and locations. When the new highway was close to the old route, average producer size increased, beginning one year before it opened. If instead the interstate substantially displaced traffic, the number of producers increased, beginning only after it opened. These dynamics are consistent with Hotelling-style oligopolistic competition with free entry and sunk costs and inconsistent with textbook perfect competition.
    JEL: L13 L22 L81
    Date: 2016–05
  6. By: Loy, Jens-Peter; Glauben, Thomas
    Abstract: Many food products show a high level of vertical and horizontal product differentiation. Manufacturers may instrument product differentiation to limit competition and to increase price dispersion. In this paper, we estimate a panel error correction cost pass-through model for the German yoghurt market over a six year period (t = 312) to determine the impact of product differentiation on price competition between individual brands and varieties of yoghurt. We find that more differentiated products show higher markups, reduced equilibrium cost pass-through and lower speed of cost-price adjustments. The results indicate that manufacturers (and/or retailers) use product differentiation to limit price competition.
    Keywords: cost pass-through, product differentiation, yoghurt, Agribusiness, Demand and Price Analysis, Industrial Organization, D4, L11, R32,
    Date: 2016–07–31
  7. By: Schulze Bisping, Christin; von Cramon-Taubadel, Stephan
    Keywords: vertical price transmission, scanner data, logistic regression, reference price, Agricultural and Food Policy, Demand and Price Analysis, Institutional and Behavioral Economics, Public Economics,
    Date: 2016
  8. By: Sharat Ganapati; Joseph S. Shapiro; Reed Walker
    Abstract: This paper studies how increases in energy input costs for production are split between consumers and producers via changes in product prices (i.e., pass-through). We show that in markets characterized by imperfect competition, marginal cost pass-through, a demand elasticity, and a price-cost markup are sufficient to characterize the relative change in welfare between producers and consumers due to a change in input costs. We find that increases in energy prices lead to higher plant-level marginal costs and output prices but lower markups. This suggests that marginal cost pass-through is incomplete, with estimates centered around 0.7. Our confidence intervals reject both zero pass-through and complete pass-through. We find heterogeneous incidence of changes in input prices across industries, with consumers bearing a smaller share of the burden than standards methods suggest.
    JEL: H22 H23 L11 Q40 Q54
    Date: 2016–05
  9. By: Richards, Timothy; Liaukonyte, Jura; Nadia, Streletskya
    Abstract: Mobile web technology enables discriminatory, or personalized, pricing for many more consumer good categories than has traditionally been the case. Setting prices according to individual valuations, however, generates adverse consumer reaction un- less consumers are invited to participate in the price-formation process. Consumer perceptions of price fairness are key to the sustainability of any discriminatory pric- ing regime. Perceptions of price fairness, in turn, are hypothesized to be shaped by "self-interested inequity aversion" in which prices tend to be regarded as unfair, and purchase probabilities fall, if others are perceived to pay a lower price, while prices tend to be regarded as more fair, and consumers more likely to purchase, if inequity is in the buyers favor. Our experimental data also shows that the implications of inequity aversion for sellers can be at least partially reversed if consumers are allowed to par- ticipate in the price-formation process by negotiating the price they pay. The primary implication of our ndings is that, in order to be viable, any system of discriminatory pricing for consumer goods should invite consumers to have a stake in the price they pay. Such participatory pricing may provide one way out of the current trap of Hi-Lo, or promotional, pricing that neither retailers nor manufacturers regard as sustainable.
    Keywords: experimental economics, fairness, inequity aversion, price discrimination, retail pricing, Industrial Organization,
    Date: 2016
  10. By: Yasuhiro Sakai (Faculty of Economics, Shiga University)
    Abstract: The long series of papers on the information exchanges among firms and their welfare implications contain three parts, namely Part I, Part II and Part III. In the previous papers, we already discussed Parts I and II. Part I was concerned with the basic dual relations between the Cournot and Bertrand models. Part II dealt with the world of risk and uncertainty, focusing on the Cournot duopoly model with a common demand risk as a starting point. It then explored other types of duopoly models with a common risk. The purpose of this paper is to discuss more complicated problems such as private risks and oligopoly models. When there exist more than two firms in an industry, the problem of the information exchange among firms becomes more complicated yet more intriguing. It will be seen that as the number of "producers as insiders" rises, the possibility of "consumers as outsiders" gaining their welfare is likely to increase. This is certainly the result which may agree with common sense. Some policy implications of our analysis will also be investigated.
    Keywords: Duopoly ECournot,Bertrand,common risk,information exchanges
    Date: 2016–05
  11. By: Philippe Aghion; Peter Howitt; Susanne Prantl
    Keywords: intellectual property rights; competition; innovation
    JEL: L1 L5 O3 O4
    Date: 2015–09
  12. By: Walsh, Darragh; Malaguzzi Valeri, Laura; Di Cosmo, Valeria
    Abstract: Market power often emerges in wholesale electricity markets. Regulators use several strategies to limit market power: adopting bidding rules, compulsory forward markets and enhancing demand response. We study the case of the Irish Single Electricity Market (SEM), where the market will eliminate strict bidding rules to comply with the European Target Electricity Model. Using the PLEXOS unit-commitment model, we simulate the price that emerges in Cournot competition and find that it is more than 60% higher than in perfect competition. We then study how much the price varies with three measures that influence market power. Limiting thermal generators’ ownership of wind generation does not affect prices. Forcing the largest firm to sell some of its output forward decreases prices, but keeps them well above competitive levels. The most effective measure is an increase in price elasticity of demand, although existing evidence shows that it is hard to achieve. We conclude that regulatory oversight of bids will have to continue, although the Target Model will be associated with limited transparency, creating further challenges.
    Keywords: regulation; oligopoly; wind generation; forward contracts; demand response
    JEL: L1 L9
    Date: 2016–05–20
  13. By: Robert A. Ritz
    Abstract: Higher renewables penetration reduces the incentive of conventional electricity generators to make forward commitments via forward- or retail-market contracts. This can undermine the role of forward contracting in mitigating market power. More renewables raise wholesale electricity prices in states of the world where their capacity utilizaton is low due to intermittency.
    Keywords: Electricity markets, renewable energy, forward contracting
    JEL: L13 L94 Q21 Q41
    Date: 2016–03–21
  14. By: Chenarides, Lauren; Jaenicke, Edward, C.
    Abstract: Shopping and store-choice decisions are intertwined with firms’ decisions to enter or exit a market, as well as with heterogeneous consumer demographics. The importance of food access becomes apparent in determining where households choose to purchase food, as consumers residing in underserved areas are faced with shopping at non-traditional stores that may result in negative welfare outcomes. Research regarding consumer purchasing behavior has traditionally looked at store choice as a nested discrete choice decision; however, we propose an alternative approach that models consumer store choice preferences for store attribute bundles, including product assortment, store services, and price via the Distance Metric (DM) method of Pinkse, Slade, and Brett (2002). Methodologically, the use of the DM method offers a straightforward way to measure substitution patterns between stores with similar attributes. In addition, the importance of product assortment, store services, and price can be described to create a more flexible model of store selection within different markets across the U.S.
    Keywords: store choice, scanner data, food access, food deserts, distance metric method, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Food Security and Poverty,
    Date: 2016
  15. By: Xuan, Chen; Rabinowitz, Adam; Liu, Yizao
    Keywords: Agribusiness, Consumer/Household Economics, Demand and Price Analysis, Industrial Organization,
    Date: 2016
  16. By: Zhang, Yu Yvette; Palma, Marco A.; Jin, Shaosheng; Yuan, Xiaotong
    Abstract: In 2013, Smithfield Foods Inc., the world’s largest pork processor, was acquired by Shuanghui International Holdings Ltd, China’s largest pork producer. The $4.7 billion acquisition marks the largest Chinese takeover of a U.S. company in history. After the acquisition, Virginia-based Smithfield became a subsidiary of Shuanghui International Holdings. In this study, we investigated how US consumers responded to the Chinese acquisition of Smithfield. We found that US consumers are willing to pay significantly more for the US brands compared to the Chinese brands. The US consumers’ willingness to pay for Smithfield products decreased significantly after they learned about the Smithfield-Shuanghui acquisition, especially for risk averse consumers and those with higher education level. Furthermore, contrasting to the results in the Chinese market, we did not find a negative spillover effect of this acquisition on other US products in the US market.
    Keywords: Merging and Acquisition, Multinational business, Chinese acquisition of US company, experimental auctions, meat industry, consumer willingness to pay, Agribusiness, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics, International Relations/Trade, Marketing, C91, D44, D12, F23, Q13,
    Date: 2016–05–25
  17. By: Woodard, Joshua; Dutta, Tridib; Xue, Lin
    Abstract: Interactions between rail and transportation networks on commodity price behavior and grain flows remains an important issue in the agricultural sector, from both an industry and policy perspective. This study explores the determinants of commodity price basis and basis convergence with a particular focus on the influence of futures market speculation in conjunction with rail rates and transportation networks, and finds that speculative positions have a significant widening impact on the basis. An overview of the data automation and data sourcing routines used in the study, employing the platform, is also presented.
    Keywords: Agribusiness, Agricultural and Food Policy, Financial Economics, Public Economics,
    Date: 2016
  18. By: Pozo, Veronica F.; Bejan, Vladimir; Tejeda, Hernan
    Keywords: Livestock Mandatory Price Reporting Act, Live Cattle market, Supply Elasticity, Demand Elasticity, Sign Restrictions, Demand and Price Analysis, Research Methods/ Statistical Methods,
    Date: 2016–07
  19. By: Nestor Duch-Brown (European Commission - JRC - IPTS); Bertin Martens (European Commission – JRC - IPTS)
    Abstract: This study investigates the welfare impact of lifting geo-blocking restrictions to cross-border e-commerce in the EU, using a dataset for consumer electronics products in ten European countries for the period 2012-2105. We simulated two counterfactual scenarios where geo-blocking is either fully or only indirectly removed. This would allow consumers to arbitrage, taking advantage of price differences, and to expand product variety through imports. We computed the welfare effects, as changes in both consumer and producer surpluses. Finally, we extrapolated these partial results to all online sales in the EU28. The results indicate that both consumers and producers would gain from removing geo-blocking restrictions. Smaller countries would benefit comparatively more than larger countries.
    Keywords: digital single market, geo-blocking, economic impact, consumer welfare, cross-border e-commerce, trade restrictions, consumer electronics
    JEL: D12
    Date: 2016–05
  20. By: Cui, Jingbo; Li, Xiaogang
    Keywords: Productivity, Backward Citations, Innovation, Knowledge Stock, Industrial Organization, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies, d22, O31,
  21. By: Alberto Behar; Robert A. Ritz
    Abstract: In November 2014, OPEC announced a new strategy geared towards improving its market share. Oil-market analysts interpreted this as an attempt to squeeze higher-cost producers, notably US shale oil, out of the market. Over the next year, crude oil prices crashed, with large repercussions for the global economy. We present a simple equilibrium model that explains the fundamental market factors that can rationalize such a “regime switch” by OPEC. These include: (i) the growth of US shale oil production; (ii) the slowdown of global oil demand; (iii) reduced cohesiveness of the OPEC cartel; (iv) production ramp-ups in other non-OPEC countries. We show that these qualitative predictions are broadly consistent with oil market developments during 2014-15. The model is calibrated to oil market data; it predicts accommodation up to 2014 and a market-share strategy thereafter, and explains large oil-price swings as well as realistically high levels of OPEC output.
    Keywords: Crude oil, OPEC, price crash, shale oil, market share, limit pricing
    JEL: L12 L71 Q41
    Date: 2016–03–31
  22. By: Ho, Shuay-Tsyr; Qu, Mingyang; Rickard, Bradley; Costanigro, Marco; McLaughlin, Edward
    Abstract: The repeal of the Prohibition Act in 1933 introduced many state-specific regulations in alcohol markets. As one example of this, several states currently have laws that restrict specific alcoholic beverages in grocery stores, and some states have recently considered lifting these restrictions. Some opponents of such legislative changes claim that allowing alcohol to be more widely distributed would put smaller liquor stores out of business and eventually lead to a narrower set of product choices available to consumers. Here we use the Nielsen Homescan dataset that describes alcoholic beverage purchasing patterns for approximately 70,000 households between 2004 and 2012 to examine this issue empirically. Our results show that, even when controlling for preferences for variety, consumers in states that allow beer and wine sales in grocery stores have greater diversity in their purchases of beer and wine. Overall, the findings suggest that expanding the retail availability of beer and wine may actually increase the diversity of alcoholic beverage products purchased by consumers in those states.
    Keywords: Entropy Index, Grocery stores, Product diversity, Regulation, Wine, Agricultural and Food Policy, Consumer/Household Economics, D12, K23, Q18,
    Date: 2016–05–25
  23. By: Izabella Szakálné Kanóa, Balázs Lengyel, Zoltán Elekes, Imre Lengyel; Balázs Lengyel; Zoltán Elekes; Imre Lengyel
    Abstract: We investigate the effect of related variety on the entry and exit patterns of domestic and foreign firms in Hungarian city regions from 1996-2012. In order to characterize the archetypes of interaction between domestic and foreign firms, we introduce three alternative models to calculate the related variety. The best fit is provided by the model, in which no interaction among foreign and domestic firms is presumed. Related variety in the foreign subset tends to accelerate firm entry and decelerate firm exit in a much earlier stage of economic transition than related variety across domestic firms.
    Keywords: related variety, firm entry and exit, foreign-owned firms, panel logistic regression, dual economy
    JEL: F43 F23 L16
    Date: 2016–05
  24. By: Fungáčová, Zuzana; Shamshur, Anastasiya; Weill, Laurent
    Abstract: Despite the extensive debate on the effects of bank competition, only a handful of single-country studies deal with the impact of bank competition on the cost of credit. We contribute to the literature by investigating the impact of bank competition on the cost of credit in a cross-country setting. Using a panel of firms from 20 European countries covering the period 2001–2011, we consider a broad set of measures of bank competition, including two structural measures (Herfindahl-Hirschman index and CR5), and two non-structural indicators (Lerner index and H-statistic). We find that bank competition increases the cost of credit and observe that the positive influence of bank competition is stronger for smaller companies. Our findings accord with the information hypothesis, whereby a lack of competition incentivizes banks to invest in soft information and conversely increased competition raises the cost of credit. This positive impact of bank competition is however influenced by the institutional and economic framework, as well as by the crisis.
    Keywords: bank competition, bank concentration, cost of credit
    JEL: G21 L11
    Date: 2016–03–30
  25. By: Laura-Lucia Richter; Michael G. Pollitt
    Abstract: This paper considers the heterogeneity of household consumer preferences for electricity service contracts in a smart grid context. The analysis is based on original data from a discrete choice experiment on smart electricity service contracts that was designed and conducted in collaboration with Accent and 1,892 UK electricity consumers in 2015. The results suggest that while customers are willing to pay for technical support services, they are likely to demand significant compensation to share their usage and personally identifying data and to participate in automated demand response programs. Based on these findings potential platform pricing strategies that could incentivise consumers to participate in a smart electricity platform market are discussed. By combining appropriate participation payments with sharing of bill savings, service providers could attract the number of customers required to provide the optimal level of demand response. We also examine the significant heterogeneity among customers to suggest how, by targeting customers with specific characteristics, smart electricity service providers could significantly reduce their customer acquisition costs.
    Keywords: Discrete Choice Experiment, smart energy, Willingness-to-Accept, platform markets
    JEL: C18 C38 D12 L94 Q42 Q55
    Date: 2016–05–16
  26. By: Alderighi, Marco; Gaggero, Alberto A; Piga, Claudio A
    Abstract: An often disregarded, albeit central, aspect of the airline pricing's problem consists in assigning a fare to all the available seats on an airplane at the beginning of and during the whole booking period. We show how a flight's fare distribution is set in practice and how it changes over time using evidence from a leading European low-cost carrier. Such pricing behavior is consistent with the main predictions from the theoretical model we present. First, fare distributions are increasing across seats because a lower fare for the seat on sale enhances the likelihood of selling the subsequent seats. Second, over time fare distributions move, on average, downward to reflect the perishable nature of a flight's seats. Third, due to the increasing profile of the fare distributions across seats, we find that the price observed by prospective buyers tends to increase as the date of departure nears.
    Keywords: dynamic pricing, option value, seat inventory control, low-cost carriers
    JEL: D22 D90 L11
    Date: 2016–06
    Date: 2016
  28. By: Liu, Yizao; Rabinowitz, Adam; Chen, Xuan
    Keywords: Agribusiness, Demand and Price Analysis,
    Date: 2016
  29. By: Bolotova, Yuliya V.
    Abstract: The private Exchange spot cheese market has historically performed a primary price-discovery function in the U.S. cheese industry. Since 1997 the spot cheese trade takes place at the Chicago Mercantile Exchange (CME). The Exchange spot cheese prices have been used as reference prices in cheese contracts used to transact the vast majority of cheese produced in the country. Furthermore, the Exchange spot cheese prices have been influencing prices paid for milk used in cheese manufacturing within the system of Federal Milk Marketing Orders (FMMOs). The objective of this research is to analyze the conduct and performance of the Exchange spot cheese market during three FMMOs milk pricing regimes (1983-2015). First, the patterns of trading activities (actual sales, unfilled bids and uncovered offers) and the behavior of spot cheddar cheese prices are analyzed. Second, to evaluate the role of the Exchange spot cheese market in the entire U.S. cheese industry, the performance of the natural cheddar cheese industry segment is evaluated by analyzing changes in milk price, wholesale cheddar cheese price, retail price of natural cheddar cheese and associated margins over time.
    Keywords: cheese pricing, Chicago Mercantile Exchange, spot cheese market, milk pricing, public pricing system, thin market., Agribusiness, Agricultural and Food Policy, Demand and Price Analysis, Industrial Organization, Marketing, L1, L2, L5, L6, Q11, Q13, Q18.,
    Date: 2016–05

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