Price Impacts of Concentration, Timing, and Product Characteristics in a Feeder Cattle Video Auction z Chris Fawson DeeVon Bailey Terry Glover This research investigates the dgerential effect zyxwvu of timing and product characteristic based measures of buyer concentration on the selling price of auctioned feeder cattle. Empirical results suggest that the fundamental dynamic price generation mechanism in feeder cattle auctions zyxwvuts is afected by measures of buyer concentration. 01996 zyxwvutsrq John Wdey zyxwvutsr & Sons, lnc. zyxwvu Introduction Developing and implementing strategies is a basic function of firm managers. But, while economic theory explains in general terms what strategies are available to buyers and sellers, it often fails to explain how firms should plan and execute strate- gies in a market. For example, theory illustrates ...................................................... zyxwv Requests for reprints should be sent to C. Fawson, Dept. of Econ., Utah State Univ., Logan, UT 84322-3530. that firms will strive to differentiate products in monopolistic competition but does not demonstrate precisely what types of products andlor pricing strategies will best differentiate the firm from oth- er competing firms. A significant amount of evidence exists that sug- gests cattle buyers behave strategically. That is, buyers exercise a plan or method when purchasing cattle in various markets. For example, work by Koontz et al. 1 employs the noncooperative game- theoretic approach developed by Green and Por- ter2 to investigate cooperativelnoncooperative con- duct in regional fed cattle markets. They conclude that market power has been exercised in fed cattle markets, that the effects of market power are par- tially obscured by changing market structures, and that market power is not static over time. Other empirical analyses indicate that buyer con- centration is associated with lower fed and feeder cattle prices."-5 While game theory offers some significant in- ............................................................................................................... We acknowledge funding support for this research from the Research Institute on Livestock Pricing and the Utah Agricultural Experiment Station. The authors are, respectively, associate professor, professor, and professor in the Department of Economics, Utah State University ............................................................................................................... Agribusiness, Vol. 12, No. 5, 485-496 (1996) zyxwvut 0 1996 by John Wiley & Sons, Inc. *485 CCC 0742-4477/96/050485-12