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Value Differentiation

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  • Goodhue, Rachael E.
  • Rausser, Gordon C.

Abstract

American agriculture is shifting from homogeneous commodities to differentiated products. Value differentiation, the process by which agrifood chain actors isolate, match, and exploit heterogeneity in consumer preferences and product attributes, is examined. Value differentiation is characterized by complementarities across four activities at each stage of the production chain: product characteristic measurement, product characteristic production, coordination between stages, and customer preference detection. Complementarities at the firm level are modeled using supermodularity. The model's predictions are discussed, as are potential testing approaches, and implications are presented for agrifood firms, marketing orders, and returns to research.

Suggested Citation

  • Goodhue, Rachael E. & Rausser, Gordon C., 2003. "Value Differentiation," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(3), pages 1-21, December.
    • Handle: RePEc:ags:jlaare:31069
    DOI: 10.22004/ag.econ.31069
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    Cited by:

    1. Rachael E. Goodhue & Dale M. Heien & Hyunok Lee & Daniel A. Sumner, 2003. "Contracts and Quality in the California Winegrape Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 23(3_4), pages 267-282, December.
    2. Goodhue, Rachael E., 1998. "Input Control and Common Risk: Addressing Agent Heterogenity and Risk Aversion in the Presence of Moral Hazard," Working Papers 225885, University of California, Davis, Department of Agricultural and Resource Economics.
    3. Erkan Rehber, 2000. "Vertical Coordination In The Agro-Food Industry And Contract Farming: A Comparative Study Of Turkey And The Usa," Food Marketing Policy Center Research Reports 052, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    4. Wendy J. Umberger & Dawn D. Thilmany McFadden & Amanda R. Smith, 2009. "Does altruism play a role in determining U.S. consumer preferences and willingness to pay for natural and regionally produced beef?," Agribusiness, John Wiley & Sons, Ltd., vol. 25(2), pages 268-285.
    5. Alexander, Corinne E. & Goodhue, Rachael E., 1999. "Production Systems Competition And The Pricing Of Innovations: An Application To Biotechnology And Seed Corn," 1999 Annual meeting, August 8-11, Nashville, TN 21646, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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