The Competitive Structure of the Australian Beef Industry: Accounting for Trade

There has been a longstanding interest in the degree of competition in the Australian meat and livestock industries. Various inquiries have examined aspects of oligopsonistic pricing practices by wholesalers, processors and retailers; labour relations in meat processing; vertical integration; and foreign ownership. No consensus has emerged, but the suspicion of noncompetitive behaviour remains. In this paper, a model developed by Holloway based on the conjectural variations of noncompetitive firms is applied to Australian beef industry data. In a model without a trade sector there was strong evidence of noncompetitive behaviour. However in a model in which the domestic and export markets were treated as being separate, there was evidence that the domestic market was competitive while the export market was not. These findings have important implications for the choice of conceptual frameworks to model this industry.