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The Efficiency of Customer Relationships: An Empirical Analysis of China’s Agricultural Wholesale Market

Author

Listed:
  • Wang, Zhigang
  • Ma, Jianlei
  • Jones, Eugene

Abstract

As in most developing countries, agricultural wholesale markets in China operate under imperfect market conditions. Traders are separated and volatile, information services are unavailable or poor, and formal credit or insurance is unavailable to traders. To deal with these circumstances, some traders have developed working relationships with their customers. This paper addresses the newly established relationships between agricultural traders and their customers within China’s wholesale markets. Important findings of the paper are (1) improved customer relationships lead to higher profits for traders; and (2) improved customer relationships lead traders to increase their use of variable capital, permanent labor, and temporary labor.

Suggested Citation

  • Wang, Zhigang & Ma, Jianlei & Jones, Eugene, 2010. "The Efficiency of Customer Relationships: An Empirical Analysis of China’s Agricultural Wholesale Market," Journal of Food Distribution Research, Food Distribution Research Society, vol. 41(3), November.
  • Handle: RePEc:ags:jlofdr:139068
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    References listed on IDEAS

    as
    1. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    2. Marcel Fafchamps & Bart Minten, 2001. "Social Capital and Agricultural Trade," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 680-685.
    3. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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