Testing the competitiveness of a multistage food marketing system: The Canadian chicken industry

This paper develops a model for testing competitive behavior in multistage food marketing systems and applies this model to the Canadian chicken indus try for the period 1965-66 to 1995-96 The empirical results suggest that th e departure from competition in the chicken retailing and processing sector s is statistically significant over the entire time period and for the peri od in which supply management has operated. However, the rejection of perfe ct competitive does not enable us to identify in which sector the market po wer lies. The results of this paper provide support for the view that highe r retail prices in Canada are not entirely due to the restriction of supply at the farm level by marketing boards. The presence of market power at eit her (or both) the processing or retailing level is also likely to result in higher retail prices.