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Value Differentiation

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  • Goodhue, Rachael E.
  • Rausser, Gordon C.

Abstract

American agriculture is shifting from homogeneous commodities to differentiated products. Value differentiation, the process by which agrifood chain actors isolate, match, and exploit heterogeneity in consumer preferences and product attributes, is examined. Value differentiation is characterized by complementarities across four activities at each stage of the production chain: product characteristic measurement, product characteristic production, coordination between stages, and customer preference detection. Complementarities at the firm level are modeled using supermodularity. The model's predictions are discussed, as are potential testing approaches, and implications are presented for agrifood firms, marketing orders, and returns to research.

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Bibliographic Info

Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 28 (2003)
Issue (Month): 03 (December)
Pages:

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Handle: RePEc:ags:jlaare:31069

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Web page: http://waeaonline.org/
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Related research

Keywords: complementarities; supermodularity; value differentiation; Agribusiness;

References

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  1. David A. Hennessy & Jutta Roosen & John A. Miranowski, 2001. "Leadership and the Provision of Safe Food," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 862-874.
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  12. Urban, Thomas N., 1991. "Agricultural Industrialization: It's Inevitable," Choices, Agricultural and Applied Economics Association, vol. 6(4).
  13. Arora, Ashish, 1996. "Testing for complementarities in reduced-form regressions: A note," Economics Letters, Elsevier, vol. 50(1), pages 51-55, January.
  14. Gallo, Anthony E., 1998. "The Food Marketing System in 1996," Agricultural Information Bulletins 33731, United States Department of Agriculture, Economic Research Service.
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  17. repec:cdl:agrebk:666281 is not listed on IDEAS
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Citations

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Cited by:
  1. Rachael E. Goodhue & Dale M. Heien & Hyunok Lee & Daniel A. Sumner, 2003. "Contracts and Quality in the California Winegrape Industry," Review of Industrial Organization, Springer, vol. 23(3_4), pages 267-282, December.
  2. Alexander, Corinne E. & Goodhue, Rachael E., 1999. "Production Systems Competition And The Pricing Of Innovations: An Application To Biotechnology And Seed Corn," 1999 Annual meeting, August 8-11, Nashville, TN 21646, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  3. Rehber, Erkan, 2000. "Vertical Coordination In The Agro-Food Industry And Contract Farming: A Comparative Study Of Turkey And The Usa," Research Reports 25225, University of Connecticut, Food Marketing Policy Center.
  4. Wendy J. Umberger & Dawn D. Thilmany McFadden & Amanda R. Smith, 2009. "Does altruism play a role in determining U.S. consumer preferences and willingness to pay for natural and regionally produced beef?," Agribusiness, John Wiley & Sons, Ltd., vol. 25(2), pages 268-285.

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