Measuring market power in the French Comte cheese market

A new empirical industrial organisation approach is used tomeasure seller market power in the French Comté cheesemarket, characterised by government-approved supply control.The estimation is performed on quarterly data at the wholesalestage over the period 1985–2005. Three different elasticityshifters are included in the demand specification, and the supplyequation accounts for the existence of the European dairy quotapolicy. The market power estimate is small and statisticallyinsignificant. Monopoly is clearly rejected. Results appearto be robust to the choice of functional form and suggest littleeffect of the supply control scheme on consumer prices.