Competitive Analysis and Market Power of China’s Soybean Import Market

Abstract

This research conducts a competitive structure analysis of the Chinese soybean import market which leads to the hypothesis that China’s soybean importers may have stronger market power in China’s soybean import market. Then, this research develops and simultaneously estimates a two-country partial equilibrium trade model to test U.S.-China market power of soybean trade. The empirical result supports our hypothesis that Chinese soybean importers have stronger market power relative to U.S. soybean exporters. This Chinese market power can be countered by U.S. and South American companies through developing new and expanding existing markets for soybeans throughout the world and investing in Chinese soybean storage and crushing capacity.