Output market power and firm characteristics in dairy processing: Evidence from three EU countries
利用2008-2017年法国、意大利和西班牙的数据，通过随机前沿方法估算乳品加工企业的价格-边际成本加成，发现平均偏离完全竞争较小，但企业间差异大，且小企业因差异化利基市场能获得更高加成。
Abstract The dairy processing industry is the largest subsector in the EU food industry and is characterised by high concentration. We investigate the extent of output market power exerted in EU dairy processing, applying an advanced stochastic frontier approach to estimate firm‐level markups of price over marginal cost using data for France, Italy and Spain from 2008 to 2017. We further relate markups to firm characteristics to identify what type of dairy processors possess the highest power in the sector. Our findings only reveal small average deviations from perfect competition but we find considerable heterogeneity of markups within and between the three countries. We identify a strong positive relationship between markup and profitability, though we find firm size and markups to be inversely related. This indicates that small firms operating in differentiated niche markets are able to charge higher markups, thereby ensuring their profitability. This result can serve EU dairy processors for future strategic alignment, and is particularly interesting from a policy perspective as large firms are mostly blamed in the exercise of market power in public and policy debates.