Market structure and non-price competitive behavior in milk industry
1997
Jarinya Itthiworamai
Results of the study showed that milk market was classified as Oligopoly. Competitiveness in the market was acheived through the differentiation in quality of raw meterial, size, package, brand name and level of customer service. The price of raw milk was determined by The Dairy Farming Promotion Organization while the ceiling retail price of milk was set by Department of Internal Trade, Ministry of Commerce. Thus, milk products prices were generally controlled both up stream and down stream. As a result, the prices were indifferent. The competitors have increased advertising budgets and promoted brand royalties to capture additional market share. Vertical integration from the farming to marketing finished products were widely adopted among the rivals. These factors generated intensive barriers for new firm to enter into the market. Government's policies and regulations provided more benefits to the farmers though subsidiary and other supporting measures. On the other hand, the policies and acts were aimed to protect the existing producers and to discourage new comers into the ready-to-drink market. Furthermore, the producers using skim milk as a material also gained benefits from GATTSs policies liberalizing world trade. Ultimately, there would be beneficial to consumers because the increasing rate of milk products might not be as high as in the past.
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