Spatial Competition of Milk Processing Cooperatives in Northern Germany
AbstractIn this paper we develop a theoretical model of competition among marketing cooperatives (co-ops) in a spatial market setting assuming uniform delivered pricing and Loschian conduct. The model is an extension to Alvarez et al.'s (2000) spatial competition model for investorowned firms (IOF). Theoretical results include i) that the prices for raw milk are, ceteris paribus, higher in a pure market of coops than in a pure IOF market; ii) that even coops may imperfectly transmit price changes upstream; and iii) that the price farmers receive for their raw product is a function of economic space (distance times transportation costs) between coops. We test our theoretical findings for milk processing co-ops in Northern Germany using data of monthly average farm-gate prices for raw milk between 1999 and 2003 and estimating a reduced form regression model. Empirical results confirm our theoretical findings to a great extent.
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Bibliographic InfoPaper provided by International Association of Agricultural Economists in its series 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia with number 25633.
Date of creation: 2006
Date of revision:
spatial competition; oligopsony; milk processing; cooperatives; Agribusiness; L13; Q13;
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sexton, Richard J. & Lavoie, Nathalie, 2001. "Food processing and distribution: An industrial organization approach," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 15, pages 863-932 Elsevier.
- AM Alvarez & EG Fidalgo & RJ Sexton & M Zhang, 2000. "Oligopsony power with uniform spatial pricing: theory and application to milk processing in Spain," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 27(3), pages 347-364, September.
- Hueth, Brent & Taylor, Christopher W., 2013. "Spatial Competition in Agricultural Markets: A Discrete-Choice Approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150506, Agricultural and Applied Economics Association.
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