Risk Shifting via Partial Vertical Integration: Beef Packers’ Acquisition of Slaughter Cattle

Abstract

Partial vertical integration of many food and agricultural industries, especially beef packers’ acquisition of slaughter cattle, increasingly raises competition and fairness issues for the non-integrated residual market. While market foreclosure may be a central antitrust concern with full integration, partial integration does not completely foreclose markets, but may shift risks to the residual non-integrated market. This short report presents empirical analysis of risk shifting in the partially integrated market for slaughter cattle.

Keywords: partial vertical integration, captive supply, cattle markets, risk shifting

JEL Classification: Q02, Q11, Q18