Causality Between Captive Supplies and Cash Market Prices in the U.S. Cattle Procurement Market

摘要: This study tests the causal direction between captive supply and cash market price in U.S. cattle procurement market. Finding correct causality should provide useful information to decades-long debate on packers' anti-competitive behavior It also help researchers find better econometric specifications for price- relationship. Two tests-the Granger test Modified Wald test-were conducted. Overall results indicate that causes price, it favors price-dependent model.Key Words: supply, market, causality, test, unit root(ProQuest: ... denotes formulae omitted.)Several studies literature have reported a negative relationship (Elam 1992, Schroeder et al. 1993, Ward 1996, Ward, Koontz, 1998, Schroeter Az- zam 2004).1 One justification of this is procure- ment methods could lower prices because packers are already guaran- teed majority slaughter (Zhang Sexton 2000). A second sell- ers would choose their selling time based expected price. For example, control delivery receive highest (Schroeter Azzam 2004). Under these circumstances, when low, increase.These two justifications well reflected case Pickett vs. Tyson Fresh Meats (Domina 2004, Taylor 2006). The plaintiff insisted supplies caused low while defendant claimed did not establish causation. producer expectations producers deliver more week went down other reasons. Initially, was ordered by District Court return $1.28 billion members all who sold fed directly Iowa Beef Processor (IBP, now Meats) from February 1994 through April 30, 1999. However, judge en- tered final judgment Tyson's favor 2004. Finally, Supreme denied ap- peal court decision 2006. Therefore, crucial task cap- tive be investigate supplies. our knowledge no has exam- ined directly. informa- tion anti- competitive price-captive relationship.The objective mar- ket particularly attempts answer question whether use predetermined as an instrument depress or if feeders previous they will future determine delivery. (Granger test) with modified (Modified used examine using weekly data quantities cat- tle We rela- tionship total supply. relationships each methods, such formula, forward contract, packer-fed cattle, both bivariate multi- variate models. …