Investigating Market Power in the Belgian Pork Production Chain

Abstract

The Belgian pig production has been confronted with stagnating prices since the start of the century. It remains unclear whether excessive market power from slaughterhouses or meat retailers plays a role. Market power studies can reveal some of the market dynamics in this setting, but this type of research has not yet been applied to the Belgian pork market. This paper investigates oligopolies and oligopsonies in the pork production sector. A new model is built to focus on market power dynamics in the market for live pigs. This model distinguishes horizontal and vertical market power parameters both for pig farmers and for slaughterhouses. The results follow from an empirical application using slaughterhouses data for the period 2001-2015. The potential reasons and consequences of these market powers are discussed.