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Traders’ market power along Indonesian rubber value chains

Author

Listed:
  • Thomas Kopp
  • Bernhard Brümmer

Abstract

Purpose - While traders of agricultural products are known to often exercise market power, this power has rarely been quantified for developing countries. The paper aims to discuss this issue. Design/methodology/approach - In order to derive a measure, the authors estimate the traders’ revenue functions and calculate the marginal value products directly from them. The authors subsequently find the determinants affecting their individual market power. Findings - Results show that market power at the traders’ level exists and is substantial. This market power is amplified in situations of extreme remoteness, and weakens with increasing market size. Originality/value - An exceptional data set with detailed information on the business practices of rubber traders in Jambi, Indonesia is employed with an innovative methodology to directly estimate revenue functions.

Suggested Citation

  • Thomas Kopp & Bernhard Brümmer, 2017. "Traders’ market power along Indonesian rubber value chains," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 9(2), pages 169-187, May.
    • Handle: RePEc:eme:caerpp:caer-07-2015-0080
    DOI: 10.1108/CAER-07-2015-0080
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    Citations

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    Cited by:

    1. Meilin Ma & Richard J. Sexton, 2021. "Modern agricultural value chains and the future of smallholder farming systems," Agricultural Economics, International Association of Agricultural Economists, vol. 52(4), pages 591-606, July.
    2. Kubitza, Christoph & Dib, Jonida Bou & Kopp, Thomas & Krishna, Vijesh V. & Nuryartono, Nunung & Qaim, Matin & Romero, Miriam & Klasen, Stephan, 2019. "Labor savings in agriculture and inequality at different spatial scales: The expansion of oil palm in Indonesia," EFForTS Discussion Paper Series 26, University of Goettingen, Collaborative Research Centre 990 "EFForTS, Ecological and Socioeconomic Functions of Tropical Lowland Rainforest Transformation Systems (Sumatra, Indonesia)".
    3. Thomas Kopp & Richard J. Sexton, 2021. "Farmers, Traders, and Processors: Buyer Market Power and Double Marginalization in Indonesia," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 543-568, March.
    4. Kopp, Thomas & Salecker, Jan, 2020. "How traders influence their neighbours: Modelling social evolutionary processes and peer effects in agricultural trade networks," Journal of Economic Dynamics and Control, Elsevier, vol. 117(C).
    5. Kubitza, Christoph & Krishna, Vijesh V. & Urban, Kira & Alamsyah, Zulkifli & Qaim, Matin, 2018. "Land Property Rights, Agricultural Intensification, and Deforestation in Indonesia," Ecological Economics, Elsevier, vol. 147(C), pages 312-321.
    6. Thomas Kopp & Jan Salecker, 2018. "Modelling Social Evolutionary Processes and Peer Effects in Agricultural Trade Networks: the Rubber Value Chain in Indonesia," Papers 1811.11476, arXiv.org.
    7. Kubitza, Christoph & Vijesh, Krishna V. & Klasen, Stephan & Kopp, Thomas & Nuryartono, Nunung & Qaim, Matin, 2021. "Labor Displacement in Agriculture: The Case of Oil Palm in Indonesia," 2021 Conference, August 17-31, 2021, Virtual 314982, International Association of Agricultural Economists.
    8. Kopp, Thomas & Nabernegg, Markus, 2022. "Inequality and Environmental Impact – Can the Two Be Reduced Jointly?," Ecological Economics, Elsevier, vol. 201(C).
    9. Thomas Kopp, 2022. "When switching costs cause market power: Rubber processing in Indonesia," Agricultural Economics, International Association of Agricultural Economists, vol. 53(3), pages 481-495, May.
    10. Villacis, Alexis H. & Kopp, Thomas & Mishra, Ashok K., 2023. "Government-Supported Marketing Channels Increase Incomes only for Producers of Local Staples: Evidence from Fruit and Vegetables Farmers in India," 2023 Annual Meeting, July 23-25, Washington D.C. 335470, Agricultural and Applied Economics Association.
    11. Ayako Ebata, 2022. "Social embeddedness of pig value chains in Myanmar and its implications for food and nutrition security," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 14(4), pages 965-976, August.
    12. Marten Graubner & Richard J. Sexton, 2023. "More competitive than you think? Pricing and location of processing firms in agricultural markets," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(3), pages 784-808, May.
    13. Kopp, T. & Salecker, J., 2018. "Identifying Influential Traders by Agent Based Modelling," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277130, International Association of Agricultural Economists.

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