Indigenous Weaning-foods Markets Competition in Enugu State, Nigeria

Abstract

An ideal weaning food must be affordable to the target market. However, it is difficult to assert, a priori, how competitive the price. For indigenous weaning-foods markets in Enugu State, Nigeria, a study on the nature of competition and societal impact is pro-active. The study used data from a cross-section of 207 indigenous weaning-foods markets in Enugu State, Nigeria to examine the structure, conduct and welfare loss of the firms using the corrected Herfindah-Hirschman Index (HHI), the Lerner index together with the elasticity of demand. The estimates of the market concentration index in the State and across the Local Government Areas (LGAs) of the State showed that weaning-foods markets are unconcentrated, as the corrected HHI was less than 1000, though with difference in comparative difference and relative difference across markets in the LGAs of the State. There was evidence that weaning-foods firms charge a price that range from 4.484 to 8.065 times the marginal cost. The State experienced a welfare loss of about 42% of revenue among akamu-joro firms in Agwu LGA, 35% among akamu-okiri and akamu-joro firms in Enugu LGA, and 36% among akamu-okiri and akamu-joro firms in Nsukka LGA of the State which increased respectively to 45.6%, 41.5% and 42.4% if the weaning-foods firms were in pure monopoly economy leaving an increase in welfare loss of about 4%, 7% and 6%, respectively. It is evident that indigenous weaning-food markets in Enugu State are neither entirely pure competition nor monopolies.