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Grocery Retailer Behavior in Perishable Fresh Produce Procurement

Listed author(s):
  • Sexton Richard J.

    (University of California-Davis)

  • Zhang Mingxia

    (California Independent System Operator)

  • Chalfant James A.

    (University of California-Davis)

This study examines supermarket retailer behavior in the procurement of iceberg lettuce from California and Arizona, vine-ripe and mature-green tomatoes from California, and mature-green tomatoes from Florida. The analysis relies upon both a reduced-form specification of farm-retail price spreads and a structural model of procurement for a perishable commodity with inelastic supply. The evidence supports a conclusion that buyers have been able to exercise oligopsony power in procuring iceberg lettuce from grower-shippers in California and Arizona. The evidence regarding buyer market power is more mixed for fresh tomatoes. The apparent success of the Florida mature-green tomato industry in enforcing a price floor and capturing a significant share of the surplus in excess of the price floor demonstrates the potential benefits to producers from coordinated behavior.

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Article provided by De Gruyter in its journal Journal of Agricultural & Food Industrial Organization.

Volume (Year): 3 (2005)
Issue (Month): 1 (February)
Pages: 1-23

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Handle: RePEc:bpj:bjafio:v:3:y:2005:i:1:n:6
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