Dynamics of Price Transmission and Market Power in the Turkish Beef Sector

This article addresses the recent beef price increases in Turkey where spikes occurred due to the impact of low milk prices that led to the liquidation of dairy herds, and suppliers’ and retailers’ market power behavior. In this research, we empirically investigate these issues by concentrating on the mechanism of price transmission along the beef marketing channel, and also by testing the possibility of existence of market power. The empirical results reject the null hypothesis of perfect competition by suppliers and retailers and show that beef price behavior is consistent with the presence of oligopolistic market structure. Price transmission is asymmetric for both retail and farm-gate prices. Market power of farmers seems to be short-lived and transitory, due to the excessive slaughter of cows and heifers at the time, whereas consolidation of retailers and their market power behavior raises long-term public concerns and has policy and agribusiness implications.