IDEAS home Printed from https://ideas.repec.org/a/ags/ifaamr/266446.html
   My bibliography  Save this article

Vertical integration in the Brazilian orange juice sector: power and transaction costs

Author

Listed:
  • Ito, Nobuiuki Costa
  • Zylbersztajn, Decio

Abstract

This paper aims to investigate the role of market power on vertical integration choices in the Brazilian orange juice sector. The main hypothesis states that market power, along with economizing drivers, has had an important role in the economic organization of the orange juice sector. In order to accomplish this task, we examine the make-or-buy decision of juice-processing firms in procurement of inputs (fruits), through a 15-year panel of five firms (more than 90% of the market). Empirical results offer new theoretical insights on role of market power in vertical integration decision. From these theoretical advancements, as implications for practitioners, market power raises attention for critical strategizing issues and antitrust remedies.

Suggested Citation

  • Ito, Nobuiuki Costa & Zylbersztajn, Decio, 2018. "Vertical integration in the Brazilian orange juice sector: power and transaction costs," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(1).
    • Handle: RePEc:ags:ifaamr:266446
    DOI: 10.22004/ag.econ.266446
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/266446/files/ifamr2016.0071.pdf
    Download Restriction: no
    File URL: https://ageconsearch.umn.edu/record/266446/files/ifamr2016.0071.pdf?subformat=pdfa
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.266446?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Edward J. Zajac & Cyrus P. Olsen, 1993. "From Transaction Cost To Transactional Value Analysis: Implications For The Study Of Interorganizational Strategies," Journal of Management Studies, Wiley Blackwell, vol. 30(1), pages 131-145, January.
    2. Kirk Monteverde & David J. Teece, 1982. "Supplier Switching Costs and Vertical Integration in the Automobile Industry," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 206-213, Spring.
    3. Riordan, Michael H, 1998. "Anticompetitive Vertical Integration by a Dominant Firm," American Economic Review, American Economic Association, vol. 88(5), pages 1232-1248, December.
    4. Shelanski, Howard A & Klein, Peter G, 1995. "Empirical Research in Transaction Cost Economics: A Review and Assessment," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 11(2), pages 335-361, October.
    5. R. H. Coase, 1972. "Industrial Organization: A Proposal for Research," NBER Chapters, in: Economic Research: Retrospect and Prospect, Volume 3, Policy Issues and Research Opportunities in Industrial Organization, pages 59-73, National Bureau of Economic Research, Inc.
    6. Scott E. Masten & Stéphane Saussier, 2000. "Econometrics of Contracts : an Assessment of Developments in the Empirical Literature on Contracting," Revue d'Économie Industrielle, Programme National Persée, vol. 92(1), pages 215-236.
    7. Andrew Dorward, 2001. "The Effects of Transaction Costs, Power and Risk on Contractual Arrangements: A Conceptual Framework for Quantitative Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(2), pages 59-73, May.
    8. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    9. Paul L. Joskow, 2002. "Transaction Cost Economics, Antitrust Rules, and Remedies," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 18(1), pages 95-116, April.
    10. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
    11. Masten, Scott E & Meehan, James W, Jr & Snyder, Edward A, 1991. "The Costs of Organization," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(1), pages 1-25, Spring.
    12. Joskow, Paul L, 1987. "Contract Duration and Relationship-Specific Investments: Empirical Evidence from Coal Markets," American Economic Review, American Economic Association, vol. 77(1), pages 168-185, March.
    13. Williamson, Oliver E, 1971. "The Vertical Integration of Production: Market Failure Considerations," American Economic Review, American Economic Association, vol. 61(2), pages 112-123, May.
    14. Williamson, Oliver E, 1995. "Hierarchies, Markets and Power in the Economy: An Economic Perspective," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 4(1), pages 21-49.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rossi, Fabiana Ribeiro & Filho, Hildo Meirelles de Souza & Miranda, Bruno Varella & Carrer, Marcelo José, 2020. "The role of contracts in the adoption of irrigation by Brazilian orange growers," Agricultural Water Management, Elsevier, vol. 233(C).
    2. Duarte, R. & Pegler, L.J. & Galhera, K., 2021. "Labour security and agency within the Orange Juice Value Chain (OJVC) in Brazil," ISS Working Papers - General Series 135312, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Robert Gibbons, 2010. "Transaction‐Cost Economics: Past, Present, and Future?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(2), pages 263-288, June.
    2. Mikko Ketokivi & Joseph T. Mahoney, 2020. "Transaction Cost Economics As a Theory of Supply Chain Efficiency," Production and Operations Management, Production and Operations Management Society, vol. 29(4), pages 1011-1031, April.
    3. De Vita, Glauco & Tekaya, Arafet & Wang, Catherine L., 2010. "Asset specificity's impact on outsourcing relationship performance: A disaggregated analysis by buyer-supplier asset specificity dimensions," Journal of Business Research, Elsevier, vol. 63(7), pages 657-666, July.
    4. L. Lambertini, 2013. "Coordinating Static and Dynamic Supply Chains with Advertising through Two-Part Tariffs," Working Papers wp874, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Gonzalez-Diaz, Manuel & Arrunada, Benito & Fernandez, Alberto, 2000. "Causes of subcontracting: evidence from panel data on construction firms," Journal of Economic Behavior & Organization, Elsevier, vol. 42(2), pages 167-187, June.
    6. Manuel González & Benito Arruñada & Alberto Fernández, 1997. "La decisión de subcontratar: el caso de las empresas constructoras," Investigaciones Economicas, Fundación SEPI, vol. 21(3), pages 501-521, September.
    7. Garg, Shresth & Ghosh, Pulak & Tan, Brandon Joel, 2023. "Within firm supply chains: Evidence from India," Journal of International Economics, Elsevier, vol. 144(C).
    8. Fan, Joseph P. H., 2000. "Price uncertainty and vertical integration: an examination of petrochemical firms," Journal of Corporate Finance, Elsevier, vol. 6(4), pages 345-376, December.
    9. Williamson, Oliver, 2009. "The Theory of the Firm as Governance Structure: From Choice to Contract," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 111-134, December.
    10. Timothy Bresnahan & Jonathan Levin, 2012. "Vertical Integration and Market Structure [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    11. Christian Balcells, 2022. "Determinants of firm boundaries and organizational performance: an empirical investigation of the Chilean truck market," Journal of Evolutionary Economics, Springer, vol. 32(2), pages 423-461, April.
    12. Woodruff, Christopher, 2002. "Non-contractible investments and vertical integration in the Mexican footwear industry," International Journal of Industrial Organization, Elsevier, vol. 20(8), pages 1197-1224, October.
    13. Davide Vannoni, 1999. "Empirical Studies of Vertical Integration: the Transaction Cost Orthodoxy," CERIS Working Paper 199903, CNR-IRCrES Research Institute on Sustainable Economic Growth - Torino (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY.
    14. Lajili, Kaouthar & Mahoney, Joseph T., 2005. "Revisiting Agency and Transaction Costs Theory Predictions on Vertical Financial Ownership and Contracting: Electronic Integration as an Organizational Form Choice," Working Papers 05-0106, University of Illinois at Urbana-Champaign, College of Business.
    15. Gibbons, Robert, 2005. "Four forma(lizable) theories of the firm?," Journal of Economic Behavior & Organization, Elsevier, vol. 58(2), pages 200-245, October.
    16. Sharon Novak & Scott Stern, 2009. "Complementarity Among Vertical Integration Decisions: Evidence from Automobile Product Development," Management Science, INFORMS, vol. 55(2), pages 311-332, February.
    17. Hermano, Víctor & Martín-Cruz, Natalia, 2013. "How to Deliver Foreign Aid? The Case of Projects Governed by the Spanish International Agency," World Development, Elsevier, vol. 43(C), pages 298-314.
    18. Wang, Sen & Bogle, Tim & van Kooten, G. Cornelis, 2012. "Forestry and the New Institutional Economics," Working Papers 130818, University of Victoria, Resource Economics and Policy.
    19. Thomas N. Hubbard, 1999. "How Wide is the Scope of Hold-Up-Based Theories? Contractual Form and Market Thickness in Trucking," NBER Working Papers 7347, National Bureau of Economic Research, Inc.
    20. Michael, Steven C., 2007. "Transaction cost entrepreneurship," Journal of Business Venturing, Elsevier, vol. 22(3), pages 412-426, May.

    More about this item

    Keywords

    Demand and Price Analysis; Marketing;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:ifaamr:266446. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/ifamaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.