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Imperfect Competition in a Spatial Model: Review of Literature and Application to an European Dairy Industry Model

Author

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  • Bouamra-Mechemache, Zohra
  • Yu, Jianyu
  • Réquillart, Vincent

Abstract

This paper analyses imperfect competition in a spatial model that is applied to the European dairy industry. We show how imperfect competition can be introduced within the dairy industry model developed by Bouamra et al. (2002). We then simulate four scenarios that differ in the assumptions on competition. We show that the existence of market power significantly modifies the implicit price of milk components, may lead to an increase in EU exports and that domestic prices are not adequate indicators of competitiveness in the presence of market power. Distribution in surplus among agents is changed and large welfare losses may be generated.

Suggested Citation

  • Bouamra-Mechemache, Zohra & Yu, Jianyu & Réquillart, Vincent, 2005. "Imperfect Competition in a Spatial Model: Review of Literature and Application to an European Dairy Industry Model," 89th Seminar, February 2-5, 2005, Parma, Italy 232586, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae89:232586
    DOI: 10.22004/ag.econ.232586
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