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The Dark Side of Coffee Market Power in the German Market for Roasted Coffee

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  • Koerner, Julia
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    Abstract

    Germany is the second important coffee market in the world, just overshadowed by the United States. Coffee is the most famous beverage in Germany - even more popular than beer. On the supply side dominate few roasters. Market structure influences the market outcome and explains the processors' ability to exercise market power. This paper aims at studying the pricing behavior in the German market for roasted coffee. Respectively, it discusses the impact of three different explanations. First, market power may be due to low price elasticity related to a high level of consumption. Second, pricing behavior may be influenced by the industry concentration. And finally, pricing behavior may be change over time due to exogenous shocks. In particular, the degree of competition has changed as a consequences of a merger. Further, cyclical demand changes induce pricing behavior. Empirical results are derived using data on the aggregate market for roasted coffee in Germany during 1992:1 to 2000:12.

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    Bibliographic Info

    Paper provided by European Association of Agricultural Economists in its series 2002 International Congress, August 28-31, 2002, Zaragoza, Spain with number 24969.

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    Date of creation: 2002
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    Handle: RePEc:ags:eaae02:24969

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    Related research

    Keywords: Market for roasted coffee; Germany; elasticity of conjectural variation; market power; simultaneous equation system; GMM; Industrial Organization;

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    Cited by:
    1. Celine Bonnet & Pierre Dubois & Sofia B. Villas Boas & Daniel Klapper, 2013. "Empirical Evidence on the Role of Nonlinear Wholesale Pricing and Vertical Restraints on Cost Pass-Through," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 500-515, May.

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