Price or Quantity Competition? Oligopolistic Structures in International Commodity Markets

Abstract

International commodity markets may be characterized by price or quantity competition and by product differentiation. As an illustration, this paper presents a set of models of the Japanese market for imported beef. The models are evaluated using a non‐nested econometric test. The one which best fits the data is a Stackelberg model with price leadership by Australia. This result provides evidence on the explicit nature of the game being played by exporters, unlike the applied conjectural variations approach which provides only an index of how competitive the market is.