In class, we discovered that the beef, pork, chicken, packaged seafood, and eggs industries are currently
involved in antitrust litigation for alleged price fixing. Price fixing is understood to be an agreement by
would-be competitors to restrict supply in order to elevate prices above their competitive level. The
White House claims that concentration in meat industries has led to higher consumer prices and other
bad labor and safety practices in these industries. This briefing by the White House details the degree of
concentration in meat industries and the negative impacts of concentration.
One possible remedy to the concentration issue is to break up large meat producers. This strategy has
precedent as the U.S. government has forced Standard Oil to breakup in 1911 and forced AT&T to split
into several regional telephone providers in 1982. However, splitting up existing companies is a blunt
strategy that may have negative consequences in the form of loss of efficiency, waste, and decreases in
payrolls. Please draft a policy brief detailing the state of concentration in the meat industry, the
economic consequences (positive or negative of concentration), and what options are available to
address the concentrated market.
Explain how splitting up the largest companies will affect market concentration and the market
equilibrium (e.g. price of food and the quantity of food). Identify which groups gain, which groups lose,
and for which groups (if any) the impact is ambiguous.
You are required to seek out at least two additional references to inform your policy brief. You must
reference information from the reading (plus your two references) in your policy brief or you will
have an automatic deduction of one letter grade.
Please address the following issues in your policy brief:
• Clearly explain the current state of market concentration. What are the positive impacts (if any)
and what are the negative impacts (if any) of a concentrated market.
• Clearly describe how the splitting up the largest companies will change concentration and the
equilibrium in the market. That is, describe what will happen to quantity, what will happen to the
price.
• Identify the winners and losers of this policy. Who will benefit, who will be harmed?
• What will the societal consequences be of breaking up the meat industry?
• Provide YOUR OPINION as to whether the meat industry should be or should NOT be broken up.
Explain why and justify your reasoning. There is no correct or incorrect opinion, only well-justified
or poorly-justified opinions.
Your market power policy briefing should be written in essay format and should include a brief introduction and conclusion.
