Oligopoly and price transmission in Turkey’s fluid milk market
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Farmers and consumers suspect that processing firms abuse their power in the milk marketing
chain. We employ threshold autoregressive and moment threshold autoregressive tests and contrary to
expectations find evidence of a downward trend in UHT milk real price without a corresponding decline in
farm-gate prices. The downward trend coincides with increased competition in the dairy industry and with
the growing market share of the formal sector at the expense of the informal sector. Major dairy processing
firms expand their market share and still enjoy healthy profits thanks to increasing returns to scale in
processing and distribution in a growing market.