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Imperfect Competition in the Fresh Tomato Industry

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  • Réquillart, Vincent
  • Simioni, Michel
  • Varela-Irimia, Xose-Luis

Abstract

In this paper, we analyse the market power of the retail industry in the French tomato market. Following the methods developed in the New Empirical Industrial Organization, we develop a structural model of this industry. The analysis is based on detailed data on final consumption and prices at both shipper and consumer levels for two types of tomatoes in France. The structural model is composed of a system of demand equation and supply equation. Supply equation includes a term that represents the market power of the retail sector. We use different models of demand in order to test the robustness of our results. We show that i) elasticity of demand varies during the year ii) the retail sector exercise only a "moderate" market power iii) the estimated mark-up of the retail sector varies from 0 to about 0.13 €/kg depending on the period iv) the mark-up is thus small (3% in average) as compared to the consumer price which is mainly explained by cost of production. We conclude to a moderate exercise of market power of the retail sector in this sector.
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Suggested Citation

  • Réquillart, Vincent & Simioni, Michel & Varela-Irimia, Xose-Luis, 2008. "Imperfect Competition in the Fresh Tomato Industry," IDEI Working Papers 498, Institut d'Économie Industrielle (IDEI), Toulouse, revised 25 Feb 2009.
    • Handle: RePEc:ide:wpaper:8629
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    Cited by:

    1. BOYER, Philippe & BUTAULT, Jean-Pierre, 2014. "L’euro alimentaire en France et le partage des valeurs ajoutées [French “food euro” and value added distribution]," MPRA Paper 105599, University Library of Munich, Germany.
    2. Dhyne, Emmanuel & Fuss, Catherine & Pesaran, M. Hashem & Sevestre, Patrick, 2011. "Lumpy Price Adjustments: A Microeconometric Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(4), pages 529-540.
    3. Boyer, Philippe & Butault, Jean-Pierre, 2014. "L’euro alimentaire en France et le partage des valeurs ajoutées," Économie rurale, French Society of Rural Economics (SFER Société Française d'Economie Rurale), vol. 342(July-Augu).
    4. Philippe Boyer & Jean-Pierre Butault, 2014. "French “food euro” and value added distribution [L’euro alimentaire en France et le partage des valeurs ajoutées]," Post-Print hal-02957483, HAL.
    5. Yuliang Cao & Muhammad Mohiuddin, 2019. "Sustainable Emerging Country Agro-Food Supply Chains: Fresh Vegetable Price Formation Mechanisms in Rural China," Sustainability, MDPI, vol. 11(10), pages 1-14, May.
    6. Juan Pablo Herrera Saavedra, 2009. "Una breve aproximación teórica a modelos de monopsonio y oligopsonio," Documentos de Economía 7751, Universidad Javeriana - Bogotá.

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    More about this item

    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
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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