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Vertical Coordination Of Marketing Systems: Lessons From The Poultry, Egg, And Pork Industries

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Author Info
Martinez, Steve W.
Abstract

The economic development of South Korea is often considered a model for developing countries. We use 1975 and 1990 data in a general equilibrium framework with a highly disaggregated sector specification to evaluate the opportunity cost of its agricultural protection. We show that although agriculture's share of the gross domestic product (GDP) declined between 1975 and 1990, the cost of agricultural protection, as measured by the loss in GDP, did not fall. The larger gap between domestic and world prices for the protected sectors exacerbated the distortions in resource allocation. Simulated removal of 1990 agricultural border protection reduced the share of agricultural GDP to the level actually observed in 1996, demonstrating how protection can impede economic structural development. The public policy implication is for developing countries to adopt policies that help the agricultural sector become competitive. Otherwise, as in Korea, the resource costs of delaying adjustment grow over time.

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Paper provided by United States Department of Agriculture, Economic Research Service in its series Agricultural Economics Reports with number 34051.

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Date of creation: 2002
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Handle: RePEc:ags:uerser:34051

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Related research
Keywords: South Korea; food policy; agricultural development; computable general equilibrium; protectionism; trade liberalization; rural development; Industrial Organization; Livestock Production/Industries;

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References listed on IDEAS
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.:
  1. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law & Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
  2. Hennessy, David A., 2002. "Information Asymmetry as a Reason for Food Industry Vertical Integration," Staff General Research Papers 5032, Iowa State University, Department of Economics.
  3. Fan, Joseph P. H., 2000. "Price uncertainty and vertical integration: an examination of petrochemical firms," Journal of Corporate Finance, Elsevier, vol. 6(4), pages 345-376, December. [Downloadable!] (restricted)
  4. Martinez, Steve W., 2000. "Price and Quality of Pork and Broiler Products: What's the Role of Vertical Coordination?," Agricultural Information Bulletins 33759, United States Department of Agriculture, Economic Research Service. [Downloadable!]
  5. MacDonald, James M, 1985. "Market Exchange or Vertical Integration: An Empirical Analysis," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 327-31, May. [Downloadable!] (restricted)
  6. Caves, Richard E. & Bradburd, Ralph M., 1988. "The empirical determinants of vertical integration," Journal of Economic Behavior & Organization, Elsevier, vol. 9(3), pages 265-279, April. [Downloadable!] (restricted)
  7. Knoeber, Charles R, 1989. "A Real Game of Chicken: Contracts, Tournaments, and the Production of Broilers," Journal of Law, Economics and Organization, Oxford University Press, vol. 5(2), pages 271-92, Fall.
  8. Martin, Laura L., 1999. "Navigating Production Contract Arrangements," Staff Papers 11591, Michigan State University, Department of Agricultural, Food, and Resource Economics. [Downloadable!]
  9. Carlton, Dennis W, 1979. "Vertical Integration in Competitive Markets under Uncertainty," Journal of Industrial Economics, Blackwell Publishing, vol. 27(3), pages 189-209, March.
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  10. Cheney, Laura M. & Brown, A. Blake & Yamano, Takashi & Masterovsky, Michael, 2001. "Issues Of Demand Specification And Industry Structure In Turkeys And Broiler Chickens," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 33(01), April. [Downloadable!]
  11. Pirrong, Stephen Craig, 1993. "Contracting Practices in Bulk Shipping Markets: A Transactions Cost Explanation," Journal of Law & Economics, University of Chicago Press, vol. 36(2), pages 937-76, October.
  12. Martin, Laura L., 1997. "Production Contracts, Risk Shifting, And Relative Performance Payments In The Pork Industry," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(02), December. [Downloadable!]
  13. Leffler, Keith B & Rucker, Randal R & Munn, Ian A, 2000. "Transaction Costs and the Collection of Information: Presale Measurement on Private Timber Sales," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(1), pages 166-88, April.
  14. Joskow, Paul L, 1988. "Asset Specificity and the Structure of Vertical Relationships: Empirical Evidence," Journal of Law, Economics and Organization, Oxford University Press, vol. 4(1), pages 95-117, Spring.
  15. Levy, David T, 1985. "The Transactions Cost Approach to Vertical Integration: An Empirical Examination," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 438-45, August. [Downloadable!] (restricted)
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  1. Franken, Jason R.V. & Pennings, Joost M.E. & Garcia, Philip, 2009. "Do Transaction Costs and Risk Preferences Influence Marketing Arrangements in the Illinois Hog Industry?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(2), August. [Downloadable!]
  2. Schulze, Birgit & Spiller, Achim & Theuvsen, Ludwig, 2006. "More Trust Instead of More Vertical Integration in the German Pork Production? Empirical Evidence and Theoretical Considerations," 99th Seminar, February 8-10, 2006, Bonn, Germany 7756, European Association of Agricultural Economists. [Downloadable!]
  3. Sergio H. Lence, 2005. "What Can the United States Learn from Spain's Pork Sector? Implications from a Comparative Economic Analysis," Center for Agricultural and Rural Development (CARD) Publications 05-mrp12, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
    Other versions:
  4. Jordaan, D. & Kirsten, J., 2008. "Investigating alternative governance systems for the South African mohair supply chain," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(2), June. [Downloadable!]
  5. Hui-Shung Chang, 2007. "Overview of the World Broiler Industry: Implications for the Philippines," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture, vol. 4(2), pages 67-82, December. [Downloadable!]
  6. Dong, Fengxia & Hennessy, David A. & Jensen, Helen H., 2008. "Contract and Exit Decisions in Finisher Hog Production," Staff General Research Papers 12956, Iowa State University, Department of Economics. [Downloadable!]
    Other versions:
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