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Competition in U.S. Farm Product Markets: Do�Long-Run Incentives Trump Short-Run Market Power?

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  • John M. Crespi
  • Tina L. Saitone
  • Richard J. Sexton

Abstract

This article addresses the current status of farm buyer market power. We argue that buyer power concerns are often overstated because traditional models of buyer power are incapable of depicting the economic interactions that are fundamental to modern agricultural markets, where exchange is governed by stable contractual relationships. Exercising short-run oligopsony power is inimical to the long-run interests of buyers in these settings because below-competitive returns will lead to the exodus of resources from input production. Policy proposals grounded in the presumed linkage between concentration, competition, and market power may well be misguided and detrimental to the objectives that proponents seek to advance. Copyright 2012, Oxford University Press.

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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal Applied Economic Perspectives and Policy.

Volume (Year): 34 (2012)
Issue (Month): 4 ()
Pages: 669-695

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Handle: RePEc:oup:apecpp:v:34:y:2012:i:4:p:669-695

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Cited by:
  1. Zavelberg, Yvonne & Wieck, Christine & Heckelei, Thomas, 2013. "Entry deterring effects of contractual relations in the dairy processing sector," 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 156225, German Association of Agricultural Economists (GEWISOLA).
  2. Wu, Steven Y., 2013. "Adapting Contract Theory to Fit Contract Farming," 2014 Allied Social Science Association (ASSA) Annual Meeting, January 3-5, 2014, Philadelphia, PA 161894, Agricultural and Applied Economics Association.

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