Evaluating orange growers' exercise of market power with marketing order volume control regulations

Previous studies have measured market power when firms consider the consequences of their actions on profits when deciding how much to produce or purchase or both. In contrast, this study illustrates how to measure the exercise of market power when growers collectively control the quantities sold to a market use via a Federal marketing order but exert no control on the quantities produced. The hypothesis that California-Arizona navel orange growers exercised some market power (but not complete monopolistic power) before 1983 could not be rejected. Growers exercised less market power from 1983 on when a USDA policy change curtailed growers' use of marketing order volume controls.