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Product flow and price change in an agricultural distribution network

Author

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  • Lee, Daekyung
  • Yang, Seong-Gyu
  • Kim, Kibum
  • Kim, Beom Jun

Abstract

We use the structure of a real distribution network of agricultural product in Korea and investigate how the change in the supply may affect the price changes in agents across the distribution network. In particular, we focus on the real network structure of cabbage distribution composed of various types of agents, from farms to consumers, and apply a dynamic model to describe how each participant reacts upon the change of input and output flow of products through the adjustment of price. Our main result implies that the effect of fluctuation of production quantity in the supplying participant can be nontrivial and the consumer price responds to such changes. We believe that our results can be useful to predict what will happen if the agricultural production changes much in the future due to the climate changes.

Suggested Citation

  • Lee, Daekyung & Yang, Seong-Gyu & Kim, Kibum & Kim, Beom Jun, 2018. "Product flow and price change in an agricultural distribution network," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 490(C), pages 70-76.
    • Handle: RePEc:eee:phsmap:v:490:y:2018:i:c:p:70-76
    DOI: 10.1016/j.physa.2017.08.006
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    References listed on IDEAS

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    1. Konur, Dinçer & Geunes, Joseph, 2016. "Supplier wholesale pricing for a retail chain: Implications of centralized vs. decentralized retailing and procurement under quantity competition," Omega, Elsevier, vol. 65(C), pages 98-110.
    2. Dasu, Sriram & Tong, Chunyang, 2010. "Dynamic pricing when consumers are strategic: Analysis of posted and contingent pricing schemes," European Journal of Operational Research, Elsevier, vol. 204(3), pages 662-671, August.
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