Raising Rivals’ Costs Strategyand Localised Agro-Food Systems In Europe
AbstractFor some Localised Agro-Food Systems (LAFS), for ex. Comté in France, Gruyère in Switzerland, the cheese and milk prices are above average whilst others as for example the Cantal from France are similar or even below average. The objective of this paper is to shed light on levers which the agents activate to assure their uniqueness is irrevocable, and uphold the benefits of their LAFS. Raising Rivals' Costs Theory gives interesting point of view about the behaviour of firms which could make use of the collective rules to raise the costs of their competitors in the particular case of LAFS oriented to the production of traditional cheeses. This will be explored through two cases studies. In the first case (territorial collective governance mode of the local supply chain), the conditions are met to conclude that the raising costs strategy corresponds to requirements which are based to a corresponding quality which meets consumers’ expectations and willingness to pay. In the second case (sectoral governance mode), few firms have taken control on the supply chain and have imposed with the time a model based on costs leadership. As conclusion, a case-by-case in-depth approach is necessary to assess whether strategy to raise costs of the rivals damages consumers welfare in the case of PDO supply chains.
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Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114243.
Date of creation: 2011
Date of revision:
PDO; localised agro-food system; Raising Rivals’ Costs; governance of LAFS; Agribusiness;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-15 (All new papers)
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