Agricultural Prices, Selection, and the Evolution of Food Industry
AbstractIn this paper, we set up a simple model that explains the relation between low input price, high exit rates and industrial oncentration. More precisely, we argue that falling input prices force firms with low productivity to exit and induce expansion of more efficient incumbents at the expense of less productive producers. Our model helps reconcile some well‐established empirical results regarding the food processing industry. Indeed, agricultural prices have been declining between the early 1900s until 2006 while, over the same period, concentration and firm productivity have been increasing in the agri‐food industry.
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Bibliographic InfoPaper provided by Structure and Performance of Agriculture and Agri-products Industry (SPAA) in its series Working Papers with number 125221.
Date of creation: Jun 2012
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Web page: http://servsas.fsaa.ulaval.ca/index.php?id=12482&L=1
Input price; Downstream industry; Entry/exit; Industrial concentration; Firm heterogeneity; Agricultural and Food Policy; Industrial Organization; International Relations/Trade; D24; L11; L25; L66;
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
This paper has been announced in the following NEP Reports:
- NEP-AGR-2012-07-08 (Agricultural Economics)
- NEP-ALL-2012-07-08 (All new papers)
- NEP-BEC-2012-07-08 (Business Economics)
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