A Model of Weekly Price Discovery for Florida Celery: Comment

In their article entitled, “A Model of Weekly Price Discovery for Florida Celery,†Shonkwiler and Pagoulatos provide an analysis of the pricing power of the Florida Celery Exchange, a marketing cooperative that represents all of that state's major celery producers. In their description of the activities of the Exchange, the authors cite several factors which indicate that Florida celery producers may have the ability to raise prices above levels that would prevail in a competitive U.S. celery market. Such factors include a market share of approximately 40 percent and a marketing allotment program which has prevented other producers from entering the industry since 1965. Shonkwiler and Pagoulatos then proceed to estimate the weekly demand faced by the Exchange and conclude, on the basis of the point estimate of an own-price elasticity, that the prices charged over the period 1972-1978 are inconsistent with those that would have been charged by a profit-maximizing monopolist. This conclusion leads them to state that the Exchange is socially beneficial because, they claim, it has provided price stability and market information without raising prices much above competition levels.