Agstar, you are confusing Economic Theory and Competition Theory. Reread Craig and Braveheart's last postings - they explain the relevant economics quite nicely.
When you start talking about the impact of the number of players involved in a market, you're talking Competition Theory. An atomistic market - many buyers and sellers - is best for efficiency and price transparency. At either end of the spectrum is monopoly and monopsony. As a market gets further away from atomistic and closer to either of the "mono's", it will continue to work efficiently over a broad range of scenarios until you get to a point where there is concentration of market power among one or more players.
Competition regulators use competition measurements such as the C4 index - a measure of market concentration among the 4 largest players. I have seen situations where the C4 was 100% - that is there were only 4 players on one side of the market - yet the regulators were not concerned because each was about the same size (no one was dominant) and there were no signs of artificial pricing or predatory actions among them. In other words, they competed.
So Agstar, you see, it's not linear. Simply moving to fewer and larger players does not in itself mean the market is working less and less well. You may be right about the concentration and market dominance in the hog industry, but last time I looked there were an awful lot of feed barley buyers out there - feed lots, feed mills, hog barns.
When you start talking about the impact of the number of players involved in a market, you're talking Competition Theory. An atomistic market - many buyers and sellers - is best for efficiency and price transparency. At either end of the spectrum is monopoly and monopsony. As a market gets further away from atomistic and closer to either of the "mono's", it will continue to work efficiently over a broad range of scenarios until you get to a point where there is concentration of market power among one or more players.
Competition regulators use competition measurements such as the C4 index - a measure of market concentration among the 4 largest players. I have seen situations where the C4 was 100% - that is there were only 4 players on one side of the market - yet the regulators were not concerned because each was about the same size (no one was dominant) and there were no signs of artificial pricing or predatory actions among them. In other words, they competed.
So Agstar, you see, it's not linear. Simply moving to fewer and larger players does not in itself mean the market is working less and less well. You may be right about the concentration and market dominance in the hog industry, but last time I looked there were an awful lot of feed barley buyers out there - feed lots, feed mills, hog barns.
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