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Market power and returns to scale in farm-value share determination

Author

Listed:
  • Ling Ma
  • Alexander Nuetah
  • Xiuqing Wang

Abstract

Purpose - The purpose of this paper is to investigate the role of market power and returns to scale in the determination of farm-value share. Design/methodology/approach - This paper utilizes the equilibrium displacement model to investigate the role of market power and returns to scale in the determination of farm-value share. Contrary to the current literature, the paper incorporates oligopoly power, oligopsony power and non-constant return to scale into one generalized model, which systematically enables us investigate the impacts of market power on the determination and changes of farm-value share. Findings - The results imply that market power as well as non-constant returns to scale is central to the understanding of farm-value share. These, in turn, indicate that ignoring the impacts of market power and degree of return to scale may overestimate or underestimate the impacts of exogenous shocks on changes in farm-value share. Originality/value - Thus, to the best of the authors’ knowledge, no literature has examined the co-existence of oligopsony power, oligopoly power as well as non-constant return to scale in farm-value share determination. This paper therefore tries to fill this gap.

Suggested Citation

  • Ling Ma & Alexander Nuetah & Xiuqing Wang, 2018. "Market power and returns to scale in farm-value share determination," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 11(1), pages 70-78, August.
    • Handle: RePEc:eme:caerpp:caer-01-2018-0003
    DOI: 10.1108/CAER-01-2018-0003
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    More about this item

    Keywords

    Market power; Farm-value share; Non-constant returns to scale; L11; Q13; Q10;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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