Middlemen Market Power and Land Reform Policy Implication: An Imperfect Competition Analysis for the Traditional Food Market of Vietnam

The traditional food distribution system is often characterized by small farmers and of several retailer called middlemen who sell their products on market. Since the intermediaries and their market powers are largely considerable in the food market, this paper proposes an industrial organization model of the middlemen in this conventional food distribution system for developing countries. Since most of the works in this field has adopted an empirical approach, the focus of our study in this paper will be instead on theoretical model. In order to analyze this situation, we borrow several arguments from the theory of imperfect competition. We assume that middlemen have oliopsony and oligopoly power in the up and down stream of the food system. We defined the consumer behavior by discrete choice model and study the quantity flow from small producers to the consumers by mean of Cournot competition. We address the question of land reform policy implication by creating a productivity shock in order to examine the effect of this instrument on the wealth of both farmers and consumers.