Document Type

Article

Journal/Book Title/Conference

Economics Research Institute Study Paper

Volume

15

Publisher

Utah State University Department of Economics

Publication Date

2002

First Page

1

Last Page

28

Abstract

This paper incorporates inventory dynamics into an analysis of market power. Using a model in which each fIrm accounts for the effect of its current action on the current and future actions of itself and its competitors, we show that measures of market power that ignore inventory dynamics are biased. We then apply the model to the beef-packing industry using annual data on cattle stocks, slaughter and prices from 1933-1999. Our estimates suggest that static measures overestimate the amount of market power exerted by beef-packing fIrms.


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