An Empirical Analysis of Pricing in the U.S. Beef Industry

The U.S. beef packing industry has historically raised competition concerns related to marketing and pricing of cattle and beef. In 2019 cattle producers, a meat wholesaler and consumers filed class action antitrust lawsuits alleging that the four largest beef packers in the country unlawfully conspired to decrease fed cattle prices and to increase wholesale and retail prices of beef and thus violated Section 1 of the Sherman Act. The supply restraints are claimed to be the primary method of implementing this price-fixing conspiracy. The research presented in the paper conducts an econometric analysis of wholesale and retail price behavior in the U.S. beef industry during the period of alleged cartel of the four largest beef packers and the prior (more competitive) period. The empirical evidence on wholesale price behavior indicates a shift from a perfectly competitive pricing of beef packers (wholesalers) during a more competitive period to an oligopoly/monopoly pricing during the alleged cartel period. The empirical evidence on retail price behavior indicates that the pricing of food retailers was consistent with oligopoly pricing during both periods of interest