In the ongoing debate over rising egg prices, some policymakers are quick to blame market consolidation and alleged price manipulation. However, as Brian Albrecht, Chief Economist at the International Center for Law & Economics (ICLE), argues in his latest Economic Forces newsletter (link), the real explanation may be far simpler — supply shocks caused by avian flu. The following is an edited version of Albrecht’s comments on the topic.
The Supply Shock Factor
Over the past three months alone, more than 30 million chickens — roughly 10% of the nation’s egg-laying population — have been culled to prevent disease spread. Since 2022, the total loss exceeds 136 million birds, creating a significant disruption in supply. Given the slow production cycle of egg-laying hens, even small disruptions can lead to drastic price swings.
The Role of Elasticity in Pricing
Economists point out that egg supply is highly inelastic in the short run, meaning production cannot quickly ramp up to meet demand. Likewise, demand for eggs is also inelastic, as they are a dietary staple with few direct substitutes. This combination results in large price increases when supply drops, even without market manipulation.
Price Fluctuations Are Not Evidence of Monopoly
Despite Federal Trade Commission (FTC) Commissioner Alvaro Bedoya’s concerns about potential price manipulation, economic fundamentals suggest otherwise. High profits at companies like Cal-Maine Foods — the largest U.S. egg producer — are not necessarily evidence of market power. Instead, firms that managed to maintain production during a crisis would naturally benefit from price increases.
Moreover, empty grocery store shelves contradict monopoly behavior, as monopolists typically restrict quantity while keeping products available at elevated prices. Instead, stock shortages and purchase limits signal a supply shock that retailers are struggling to manage.
Antitrust Scrutiny Should Be Data-Driven
While market structure in the egg industry is worth examining, jumping to conclusions without clear economic evidence risks misguided policy responses. Antitrust enforcement should be based on careful analysis, not assumptions about market power.
Ultimately, Occam’s Razor favors the simplest explanation — supply disruptions, not monopolistic manipulation, are driving the price surge. Instead of looking for conspiracy theories, policymakers should focus on addressing the real issue: rebuilding egg production capacity.