Marketing agreement impacts in an experimental market for fed cattle

Marketing agreements between meatpacking and cattle feeding firms have crea ted concerns about their effects on fed cattle prices. Profit-sharing marke ting agreements were imposed onto a simulated fed cattle market. Price leve l and variability differences with and without agreements, between agreemen t participants and nonparticipants, during agreement and nonagreement perio ds, and between participants receiving and not receiving a monetary incenti ve were evaluated. Prices and variability for nonagreement cattle were high er during the agreement periods. Marketing agreement participants realized lower, less variable prices than nonparticipating firms. Monetary incentive s did not affect price levels but increased price variability.