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Cartel Pricing with Entry: the Experience of the Far West Marketing Order for Spearmint

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  • Balagtas, Joseph Valdes
  • Masters, William J.
  • Zimmer, Timothy

Abstract

This paper documents the remarkable experience of the Far West mint producers in the operation of their marketing order. From 1993 to 2002, the marketing order witnessed a dramatic reduction its share of the Scotch spearmint market, as well as a reduction in both its price. We apply a model of a cartel facing a competitive fringe to describe the fall in the marketing order price as a logical consequence of increased world production of spearmint oil. We estimate an econometric model of the marketing order price and find that a 1-percent change in the marketing order's market share corresponds to a 0.8 percent change in the marketing order price.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19328.

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Date of creation: 2005
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Handle: RePEc:ags:aaea05:19328

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Keywords: Marketing;

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  1. Lee, Hyunok & Alston, Julian M. & Carman, Hoy F. & Sutton, William R., 1996. "Mandated Marketing Programs For California Commodities," Information Series 11919, University of California, Davis, Giannini Foundation.
  2. Filson, Darren, et al, 2001. "Market Power and Cartel Formation: Theory and an Empirical Test," Journal of Law and Economics, University of Chicago Press, vol. 44(2), pages 465-80, October.
  3. Berck, Peter & Perloff, Jeffrey M, 1984. "A Dynamic Analysis of Marketing Orders, Voting , and Welfare," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt3d09786w, Department of Agricultural & Resource Economics, UC Berkeley.
  4. Kwoka, John E, Jr, 1977. "Pricing under Federal Milk Market Regulation," Economic Inquiry, Western Economic Association International, vol. 15(3), pages 367-84, July.
  5. Crespi, John M. & Chacon-Cascante, Adriana, 2002. "Do U.S. Marketing Orders Have Much Market Power? An Examination Of The Almond Board Of California," 2002 Annual meeting, July 28-31, Long Beach, CA 19888, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. repec:cdl:agrebk:623332 is not listed on IDEAS
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