In recent years, prices of meat have increased rapidly in some regions, even as the prices paid to livestock producers have decreased. This has led to record profits for many of the world’s largest meat processors, due to their strategic position between more diffuse producers and consumers. If price fixing is technically illegal, how have firms been able to coordinate their actions effectively? One way to put industry interests ahead of individual firm interests is to structure better conditions for higher prices. This may include, (1) the use of data sharing firms to exchange what is typically confidential business information, (2) increasing common ownership by asset management firms, and (3) “gin rummy” deals—swapping divisions among the largest firms. Directions of movement that would better protect consumers, producers and workers face significant obstacles in the near term but are more likely to be achieved in the long term.
Phil Howard (Wed,) studied this question.