Journal Article

Nonparametric Tests of Profit Maximization in Oligopoly with Application to the Beef Packing Industry

Paul J. Driscoll, S. Murthy Kambhampaty and Wayne D. Purcell

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 79, issue 3, pages 872-879
Published in print August 1997 | ISSN: 0002-9092
Published online August 1997 | e-ISSN: 1467-8276 | DOI: http://dx.doi.org/10.2307/1244428
Nonparametric Tests of Profit Maximization in Oligopoly with Application to the Beef Packing Industry

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In this paper, we develop new, nonparametric methods of testing for static profit maximization given noncompetitive behavior. Repeated application of the test yields “maximum likelihood” estimates of the degree of noncompetitive behavior. Using plant-level data, these newly developed nonparametric methods are employed to test the hypothesis that beef packers are profit maximizers and to measure the extent to which packers influence prices in fed-cattle markets.

Keywords: beef packers; noncompetitive behavior; nonparametric tests; C520; Q120

Journal Article.  0 words. 

Subjects: Econometric Modelling ; Agricultural Economics

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