Author: Sheldon Kimmel Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Xia and Sexton find anti-competitive effects from contracts between meat-packers and ranchers that require delivery of all of a contracting rancher's cattle to the packer it contracted with at the highest price cattle wind up selling for in the spot market (i.e., the "Top-of-the-Market" price). While XS recommend banning such clauses, this comment shows that the SX model is too unrealistic to support such a conclusion. Since TOMP clauses can provide important benefits to society, and there is no particular reason to think that they are harmful, they should not be banned.
Author: Tian Xia Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This article examines the competitive implications of contract pricing arrangements, which link the contract price to the subsequent cash price. We focus on so-called "top-of-the-market pricing" (TOMP) in cattle procurement. The TOMP clause is shown to have anticompetitive consequences when the same buyers who purchase contract cattle with the TOMP clause also compete to procure cattle in the subsequent spot market. The TOMP clause reduces packers' incentives to compete aggressively in the spot market. Although TOMP pricing is not in producers' collective interest, rational sellers may nonetheless sign these contracts with little or no financial inducement.