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Competition in Local Food Markets

Author

Listed:
  • Connolly, Cristina
  • Klaiber, H. Allen

Abstract

While local food production plays an increasingly prominent role in U.S. agriculture, there is growing concern about oversaturation. Using a national dataset, we identify locational attributes that are conducive to the establishment of direct-marketing operations and assess competitive behavior. Our model links firm-entry decisions to market size using reduced-form profit functions, which are characterized by the cost of agricultural land and demand variables. We find significant heterogeneity in the required population to support direct-marketing entrants and show that markets become perfectly competitive upon entry of the third direct-marketing establishment, with heterogeneous market potential for new entrants.

Suggested Citation

  • Connolly, Cristina & Klaiber, H. Allen, 2019. "Competition in Local Food Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 44(2), May.
    • Handle: RePEc:ags:jlaare:287980
    DOI: 10.22004/ag.econ.287980
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    Cited by:

    1. Stevens Azima & Patrick Mundler, 2022. "Does direct farm marketing fulfill its promises? analyzing job satisfaction among direct-market farmers in Canada," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 39(2), pages 791-807, June.
    2. Jeffrey K. O'Hara & Nony Dutton & Nick Stavely, 2022. "The influence of farmers markets' characteristics on vendor sales," Agribusiness, John Wiley & Sons, Ltd., vol. 38(2), pages 295-311, April.
    3. Martinez, Steve W. & Park, Timothy, "undated". "Marketing Practices and Financial Performance of Local Food Producers: A Comparison of Beginning and Experienced Farmers," USDA Miscellaneous 313069, United States Department of Agriculture.

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