The Impact of Market Structure on Pass-through of International Beef Prices to Local Cattle Prices

This thesis examines the e ect of horizontal market structure among beef cattle producers on pass-through of international beef prices to local saleyard cattle prices. The measure of market concentration used is the Her ndahl-Hirschman Index ( HHI ). HHIs are constructed using newly-available disaggregated cattle herd size data for 9 regions across the state of New South Wales. A time-invariant HHI for each region is interacted with international beef price and xed e ects ordinary least squares techniques are applied. The analysis yields that market concentration among beef producers is signi cantly negatively related to pass-through of anticipated international beef prices. No signi cant e ect of horizontal market structure on pass-through of contemporaneous or lagged international beef prices is identi ed. It is argued that these ndings are likely due to the interaction between horizontal and vertical market structure in the NSW beeef supply chain. This thesis also explores whether the estimated e ect of market structure on pass-through is a ected by the inclusion of exchange rate pass-through e ects in the model. It is found that the inclusion of an exchange rate term does not greatly in uence the estimated e ect of market structure on international beef price pass-through, although the results indicate that the e ect of market structure on pass-through of exchange rates is larger in magnitude.