Market power in food supply chain: evidence from Italian pasta chain

Abstract

Purpose

During the last years, the Italian pasta chain has been strongly affected by some events such as CAP reforms in the durum wheat sector that have progressively reduced government intervention in the market and a case of anti-competitive practices against pasta makers was identified and sanctioned by the Italian Antitrust Authority. The purpose of this paper is to detect the presence of market power in the different phases of the Italian pasta supply chain.

Design/methodology/approach

The authors applied the “first-pass” test proposed by Lloyd et al. (2009) on a set of monthly price indexes series from 2000 to 2013 in order to estimate if market power exists along Italian pasta chain.

Findings

Estimated results suggest that market power exists in the Italian pasta supply chain. Precisely, the presence of market power is detected for semolina producers in 2000–2004, for pasta makers in 2005–2008 as already identified by Italian antitrust and, finally, for retailers in 2008–2013.

Research limitations/implications

The method is a “first pass” test that only allows researchers to identify the presence of market power, but it is unable to estimate the intensity of this power.

Originality/value

The paper gives a contribute on estimation of market power in a food supply chain affected by CAP reform and antitrust intervention.

Citation

Cacchiarelli, L. and Sorrentino, A. (2018), "Market power in food supply chain: evidence from Italian pasta chain", British Food Journal, Vol. 120 No. 9, pp. 2129-2141. https://doi.org/10.1108/BFJ-10-2017-0548