Estimating the degree of market power and price-response strategies in a product-differentiated oligopoly: The case of the canned tuna industry in a local market

This dissertation estimates the degree of market power and strategic-price responses among brands in the canned tuna industry in a local market. Weekly scanner data on the purchases of canned-tuna in Knoxville, Tennessee collected by Information Resources, Incorporated (IRI) were used for the estimation of the degree of market power and strategic-price responses.; There are two empirical parts. The first part focuses on estimation of the degrees of market power and strategic-price responses among canned tuna brands in the market based on a static approach. The second part investigates strategic-price responses based on a dynamic approach.; In the first part, the market is assumed to be operated under Bertrand competition. The linear approximate almost ideal demand system (LA/AIDS) and price-reaction equations were estimated simultaneously. Measures of the degree of market power include the Rothschild index (RI), the O index (OI) and the Chamberlin quotient (CQ).; In the second part, the Bertrand-competition assumption is replaced by an assumption that a firm in the market sets its price depending on its own past prices and those of rivals. A vector autoregressive (VAR) model is employed and its applications, including the Granger-causality test, the impulse response function (IRF) analysis, and the forecast error variance decomposition (FEVD) analysis, are used to investigate the dynamic price relationships.; The static analysis finds evidence of market power in the canned tuna market. The findings of the second part offer valuable insights in that the study of strategic-price responses based on both static and dynamic approaches provide significantly better understanding in firms' pricing behaviors.