Price Dispersions in Auction Markets: A Case Study of the Cattle Auction Markets

This study investigated the different factors affecting selected cattle auction prices and their dispersions to establish the market structure and nature of price equilibria. Overall, price dispersions were influenced by the season, type of cattle, breed, sex, geographical location, total number of lots auctioned, price slides, proportions of different cattle classes, lot size, base weight, type of flesh and type of frame. Prices were highest in winter and lowest in fall. Prices variations were lowest in winter and highest in fall. Price dispersions were more peaked in fall and least peaked in summer. Price equilibria were monopolistically competitive, monopsonistically competitive, or purely competitive depending on the cattle class and auction considered. These results indicated that sellers may benefit if they sold their cattle through auction markets