Quality management systems and the estimation of market power exertion
This dissertation explores in one essay the modeling of quality management systems and in two essays the estimation of market power exertion. The first essay models the impact of food quality management systems on competitiveness and markets considering specifically credence attributes. The model takes into account the relationship between firms within the supply chain and at the interface with the consumer. We find that firms employ extrinsic indicators and cues to transform credence attributes into search attributes. This enables firms to monitor the quality of the goods of their suppliers as well as their own good's level of quality. Additionally, we find that the level of quality in one firm influences the investment decisions regarding quality of its links along the supply chain. This effect is stronger the closer a firm is to the consumers who initiate the demand for a certain (maybe high) level of quality depending on what consumers perceive as quality in a product. The second essay reviews recent literature reflecting the development of statistical deterministic nonparametric market power tests. Monte Carlo experiments are used to evaluate the veracity of two monopolistic and three monopsonistic market power tests that use the statistical nonparametric approach. The experiments are implemented using data from fourteen known market structures. The third essay uses Monte Carlo experiments to assess the accuracy of six nonstructural market power tests. The tests are implemented using the same data set. The nonstructural market power tests are found to be unreliable in predicting the market power exertion as the market power parameters are roughly of the same magnitude for all fourteen market structures. The results for the statistical nonparametric market power tests are more promising. They clearly indicate when market power exertion exist. However, they are not precise in predicting the magnitude of market power exertion.
0503: Agricultural economics