Oligopsony Power, Asset Specificity and Hold-Up : Evidence from the Broiler Industry

In this paper we look for empirical evidence of hold-up in the broiler industry by using the cross-sectional national survey of broiler growers. First, we focus on the problem of under-investment and hypothesize that the degree of under-investment is negatively related to the number of processors competing for grower services in a given area. Second, we provide an indirect test of hold-up by looking at the grower contract payoffs as a function of the frequency of the technology upgrade requests and the processor's market power. The results show moderate empirical support for the presence of hold-up in the broiler industry contracts