L05Sep11_306

L05Sep11_306 - Lecture 5: Food Market Structure and Market...

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Lecture 5: Food Market Structure and Market Power FRE 306
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Lec 5: Food Market Structure and Market Power 2 Introduction What is the structure of the food sector in Canada? Are large firms dominant, and increasingly so? Is our food supply increasingly controlled by small number of large predatory firms? Do large firms pose a threat to competition in these food markets? Are these particular problems in fd retailing? Some say so How can we measure this? Is there a connection to trade in all of this? Does increased trade increase the size of firms and their market power? Can trade be used as a tool in limiting this market power?
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Lec 5: Food Market Structure and Market Power 3 What data indicate such mkt power? What kind of data would you look for to indicate our food supply is being dominated by a small number of powerful firms? Their size? Number of firms? How to show their market power, their ability to set prices? One measure: CR4 (share of sales of 4 largest firms) Are there other “expressions” of their power that we can observe or measure? Usually from anti- competitive actions in which they engage How much can they profit from or exploit their market power?
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Lec 5: Food Market Structure and Market Power 4 Importance of Competitive Markets Why are competition and competitive markets important? Central tenet of welfare economics; the optimality of a system of free markets is conditional (among other things) on them being competitive Major policy area for most countries is to maintain and foster competition, or to inhibit monopolies (Canada’s Bureau of Competition Policy, US Department of
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L05Sep11_306 - Lecture 5: Food Market Structure and Market...

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