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Grocery Retailer Behavior in Perishable Fresh Produce Procurement


  • 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.

Suggested Citation

  • Sexton Richard J. & Zhang Mingxia & Chalfant James A., 2005. "Grocery Retailer Behavior in Perishable Fresh Produce Procurement," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(1), pages 1-23, February.
  • Handle: RePEc:bpj:bjafio:v:3:y:2005:i:1:n:6

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    References listed on IDEAS

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    Cited by:

    1. Réquillart, Vincent & Simioni, Michel & Varela-Irimia, Xose-Luis, 2008. "Imperfect Competition in the Fresh Tomato Industry," IDEI Working Papers 498, Institut d'Économie Industrielle (IDEI), Toulouse, revised 25 Feb 2009.
    2. Li, Lan & Carman, Hoy F. & Sexton, Richard J., 2005. "Grocery Retailer Pricing Behavior for California Avocados with Implications for Industry Promotion Strategies," 2005 Annual meeting, July 24-27, Providence, RI 19498, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Kachel, Yael & Finkelsthain, Israel, 2009. "Antitrust Legislation and Cooperation in Fish Marketing," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 37(2).
    4. Haji, Jema, 2008. "Economic efficiency and marketing performance of vegetable production in the eastern and central parts of Ethiopia," Department of Economics publications 1730, Swedish University of Agricultural Sciences, Department of Economics.
    5. Cotterill, Ronald W., 2006. "Antitrust analysis of supermarkets: global concerns playing out in local markets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(1), March.
    6. Johan F.M. Swinnen & Anneleen Vandeplas, 2010. "Market power and rents in global supply chains," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 109-120, November.
    7. Habtu T. Weldegebriel & Xiuqing Wang & Anthony J. Rayner, 2012. "Price transmission market power and industry technology: a note," China Agricultural Economic Review, Emerald Group Publishing, vol. 4(3), pages 281-299, August.

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