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Investigating Bargaining Power of Farmers and Processors in Iran's Dairy Market

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  • Shokoohi, Zeinab
  • Chizari, Amir Hossein
  • Asgari, Madhi

Abstract

The farm-gate price of raw milk in Iran is determined annually in negotiations among representatives of dairy processors, milk producers, and government officials. This study estimates the average bargaining power of dairy farmers and processors, through applying the generalized axiomatic Nash approach in a bilateral bargaining model. We employ annual data from 1990 to 2013 to estimate econometric representation of a bilateral bargaining model using a Monte Carlo expectation maximization algorithm. Results imply a higher bargaining power of 0.69 for processors, compared with 0.31 for farmers. This asymmetry of bargaining power causes unequal allocation of gains in the milk market.

Suggested Citation

  • Shokoohi, Zeinab & Chizari, Amir Hossein & Asgari, Madhi, 2018. "Investigating Bargaining Power of Farmers and Processors in Iran's Dairy Market," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 51(1), September.
    • Handle: RePEc:ags:joaaec:356464
    DOI: 10.22004/ag.econ.356464
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    Keywords

    Agribusiness; Dairy Farming;

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