Previous studies on market power hypothesis strictly assumed that the data used in the analysis were a stationary process. This assumption has been argued that not all time series exhibit a stationary process such that conventional asymptotic theory cannot be applied. This study adopts the New Empirical Industrial Organization (NEIO) approach developed by Bresnahan (1982) and Lau (1982) to measure the degree of market power in the export market for soybean complex. The non-stationary properties of the data were accommodated by formulating the model in an error correction framework (ECM) developed by Bårdsen (1989) and applied by Steen and Salvanes (1999).
The results can be summarized as follows. First, tests for stationarity on all the data used in this study show that each series exhibit unit root processes and variables under consideration are co-integrated with one co-integrating vector. Second, estimates of market power indices and the hypothesis tests of market power suggest that both soybean and soybean meal export markets are deemed competitive rather than behaving as a Cournot or any other forms of non competitive behavior. Third, estimates of own-price elasticities indicate that export markets for soybean and soybean meal are price elastic with the magnitudes fall in the range of previous estimates. The income elasticity of export demand is found to be inelastic in both markets.
Bårdsens model results are compared to estimates from Johansens maximum likelihood and Engle Granger procedures.
| Identifer | oai:union.ndltd.org:LSU/oai:etd.lsu.edu:etd-12082005-112815 |
| Date | 08 December 2005 |
| Creators | Susanto, Dwi |
| Contributors | Gail L. Cramer, Sudipta Sarangi, P. Lynn Kennedy, Hector O. Zapata, Michael E. Salassi, Cameron Thies |
| Publisher | LSU |
| Source Sets | Louisiana State University |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lsu.edu/docs/available/etd-12082005-112815/ |
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