A resurgence of consolidation in the U.S. meat packing industry in the past
few decades has stimulated academic and policy debate. Issues raised inclu
de the role of cost economies in driving these patterns, and the effects on
the agricultural sector (cattle producers) from market power. Here, plant
level cost and revenue data for U.S, beef packing plants are used to estima
te a cost-based model incorporating cattle- and output-market pricing behav
ior. The robust results indicate little market power exploitation in either
the cattle input or beef output markets, and that any apparent evidence is
counteracted by cost efficiencies such as utilization and scope economies.
utilization.