The Effect of BSE Occurrence on US Market Power in Beef Exports

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  • Zhou Sitong
    元九州大学大学院生物資源環境科学府農業資源経済学専攻食料経済分析学分野
  • Takahashi Kohya
    Department of Agricultural and Resource Economics, Faculty of Agriculture, Kyushu University
  • Maeda Koshi
    Department of Agricultural and Resource Economics, Faculty of Agriculture, Kyushu University

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Other Title
  • BSEの発生が米国牛肉の市場支配力に与えた影響

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Abstract

The outbreak of bovine spongiform encephalopathy (BSE) in the US in December 2003 dramatically decreased the quantity of US beef exports. After the outbreak, US beef exports were able to recover their pre-outbreak value only by 2011. However, the change in US beef exports’ market power, which is an important factor in generating profits, is unclear. This study econometrically investigates how the BSE outbreak affected US market power in beef exports to the global market. The residual demand model is used to measure the degree of market power and the rolling windows estimation method to clarify its time-series variation. The main results of the analysis are as follows. First, the full sample estimation shows that US beef exports had, on the whole, significant market power from 1990 to 2017. Second, the results of the rolling windows estimation indicate that despite a dramatic weakening after the BSE outbreak, the market power of US beef exports began to increase again once exports regained their pre-outbreak level. In addition, the current degree of market power is greater than that before the BSE outbreak.

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