Market Power and the Cattle Cycle

The relationship between the dynamic cattle cycle and the potential for market power in cattle purchases has rarely been studied. This paper provides a conceptual framework showing how the cattle cycle and buyer market power are related. Not only does a larger cattle stock lead to a lower fed cattle price, but the cattle stock's negative effect on price is magnified by the degree of buyer market power in cattle procurement. Empirical findings support the posited theoretical relationships and help explain why previous researchers reached different conclusions regarding the extent of market power in the industry. Copyright 2010, Oxford University Press.