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Imperfect competition in the fresh tomato industry

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  • Requillart, Vincent
  • Simioni, Michel
  • Varela Irimia, Xose Luis

Abstract

In this paper, we analyse the market power of the retail industry in the French tomato market. Following the methods developed in the New Empirical Industrial Organization, we develop a structural model of this industry. The analysis is based on detailed data on final consumption and prices at both shipper and consumer levels for two types of tomatoes in France. The structural model is composed of a system of demand equations, supply equations and pricing equations which include terms which capture the oligopoly and oligopsony power of the retail sector. We show that i) elasticity of demand varies during the year ii) the retail sector exercise only a ‘moderate’ market power iii) the exercise of market power decreases over time iv) If markets were competitive, in the case of tomato ‘ronde’ retail price would decrease by about 1.2% to 4.5% depending on the year; v) In absence of market power, shipping price might be 6% to 24% higher than observed. We find higher distortions in the case of tomato ‘grappe’. We also find that the distortions tend to decrease over time. We conclude to a moderate exercise of market power of the retail sector in the French tomato market.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 44279.

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Date of creation: 2008
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Handle: RePEc:ags:eaae08:44279

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Keywords: Oligopoly; Oligopsony; Fresh products; Industrial Organization;

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  1. Schroeter, John R., 1988. "Estimating the Degree of Market Power in the Beef Packing Industry," Staff General Research Papers 11114, Iowa State University, Department of Economics.
  2. Schroeter, John R. & Azzam, Azzeddine M., 1990. "Measuring Market Power in Multi-Product Oligopolies: The U.S. Meat Industry," Staff General Research Papers 11112, Iowa State University, Department of Economics.
  3. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
  4. L Bettendorf & F Verboven, 2000. "Incomplete transmission of coffee bean prices: evidence from The Netherlands," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 27(1), pages 1-16, March.
  5. Reiss, Peter C. & Wolak, Frank A., 2007. "Structural Econometric Modeling: Rationales and Examples from Industrial Organization," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 64 Elsevier.
  6. Michel Simioni & Daniel Hassan, 2004. "Transmission des prix dans la filière des fruits et légumes: une application des tests de cointégration avec seuils," Économie rurale, Programme National Persée, vol. 283(1), pages 27-46.
  7. Corts, Kenneth S., 1998. "Conduct parameters and the measurement of market power," Journal of Econometrics, Elsevier, vol. 88(2), pages 227-250, November.
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Cited by:
  1. Emmanuel Dhyne & Catherine Fuss & M. Hashem Pesaran & Patrick Sevestre, 2007. "Lumpy Price Adjustments: A Microeconometric Analysis," CESifo Working Paper Series 2010, CESifo Group Munich.
  2. Juan Pablo Herrera Saavedra, 2009. "Una breve aproximación teórica a modelos de monopsonio y oligopsonio," DOCUMENTOS DE ECONOMÍA 007751, UNIVERSIDAD JAVERIANA - BOGOTÁ.

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