Competition in the Swedish Coffee Market, 1978-2002

41 Pages Posted: 8 Feb 2006

See all articles by Dick Durevall

Dick Durevall

Göteborg University - School of Business, Economics and Law

Date Written: January 2006

Abstract

Are multinationals exploiting their market power in national coffee markets by keeping consumer prices too high and thereby limiting demand for imports of coffee beans? The purpose of this study is to address this issue by testing if there is market power on the Swedish market for roasted coffee. The market structure is typical of many consumer markets for coffee, with four very large roasting companies, two of which are multinationals, plus many small ones. To analyze the degree of market power, an oligopoly model is estimated using market time series data. The econometric approach is to first test for long-run relationships between the variables with cointegration analysis and then to estimate a system of equations for demand and pricing behavior. Our key finding is that there is evidence of some market power in the short run but none in the long run.

Keywords: coffee market, conduct parameter, market power, multinationals, oligopoly, Sweden

JEL Classification: L13, L66, L81

Suggested Citation

Durevall, Dick Johnny, Competition in the Swedish Coffee Market, 1978-2002 (January 2006). Available at SSRN: https://ssrn.com/abstract=881746 or http://dx.doi.org/10.2139/ssrn.881746

Dick Johnny Durevall (Contact Author)

Göteborg University - School of Business, Economics and Law ( email )

Box 605
Goteborg, 40530
Sweden

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