This paper estimates the degree of oligopoly power of domestic dairy processors for white fluid milk in the Korean dairy market. As Corts criticized, the NEIO estimate could be biased. Hence, this paper considers an incentive compatibility condition to check whether there is a bias in the estimate obtained by the NEIO approach. If there is an incentive for firms in the market to deviate from the current market structure, the market power parameter could be changed. To reflect the incentive compatibility condition, this paper uses seasonal demand shifts in the domestic fluid-milk market.