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Price Discrimination in the Context of Vertical Differentiation: An Application to Canadian Wheat Exports

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  • Nathalie Lavoie

Abstract

The ability of the Canadian Wheat Board (CWB) to price discriminate in wheat exports is examined. The conceptual model shows that the CWB's ability to exploit cost differences in pricing depends on the extent of differentiation between Canadian and U.S. wheat. This model is implemented using monthly confidential price data for exports to four markets from 1982 to 1994. The empirical results support the conclusions that (1) the CWB has market power emerging from product differentiation, (2) the CWB price discriminates across export markets, and (3) Alchian—Allen effects are important in pricing in markets valuing quality such as Japan and the United Kingdom. Copyright 2005, Oxford University Press.

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  • Nathalie Lavoie, 2005. "Price Discrimination in the Context of Vertical Differentiation: An Application to Canadian Wheat Exports," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 835-854.
  • Handle: RePEc:oup:ajagec:v:87:y:2005:i:4:p:835-854
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2005.00773.x
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    Cited by:

    1. Pall, Zsombor & Perekhozhuk, Oleksandr & Teuber, Ramona & Glauben, Thomas, 2011. "Wheat trade - does Russia price discriminate across export destinations?," IAMO Forum 2011: Will the "BRICs Decade" Continue? – Prospects for Trade and Growth 15, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
    2. Philip Dawson & Matthew Gorton & Carmen Hubbard & Lionel Hubbard, 2017. "Pricing-To-Market Analysis: The Case of EU Wheat Exports," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 301-315, February.
    3. Varma, Poornima & Issar Akash, 2017. "India's Horticulture Sector - A Port- Level Analysis of Onion Export Pricing," IIMA Working Papers WP2017-03-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
    4. Gallardo, Rosa Karina & Lusk, Jayson L. & Holcomb, Rodney B., 2008. "Effect of Publicly Released Quality Information for US Hard Red Winter Wheat on Mexican Millers' Welfare," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6869, Southern Agricultural Economics Association.
    5. Tamini, Lota Dabio, 2012. "Optimal quality choice under uncertainty on market development," Working Papers 148589, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
    6. Scoppola, Margherita, 2006. "Economies of Scale and Endogenous Market Structures in International Grain Trade," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25322, International Association of Agricultural Economists.
    7. Poornima Varma & Akash Issar, 2016. "Pricing to market behaviour of India's high value agri-food exporters: an empirical analysis of major destination markets," Agricultural Economics, International Association of Agricultural Economists, vol. 47(1), pages 129-137, January.
    8. Ramos, Maria Priscila & Bureau, Jean-Christophe & Salvatici, Luca, 2007. "Shipping the good beef out: EU trade liberalization to Mercosur exports," Working Papers 7215, TRADEAG - Agricultural Trade Agreements.
    9. Margherita Scoppola, 2010. "The Liberalisation of Tariff Rate Quotas under Oligopolistic Competition," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(3), pages 584-604.
    10. Gafarova, Gulmira & Perekhozhuk, Oleksandr & Glauben, Thomas, 2015. "Price Discrimination And Pricing-To-Market Behavior Of Black Sea Region Wheat Exporters," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 47(03), pages 287-316, August.
    11. Tamini, Lota D., 2012. "Optimal quality choice under uncertainty on market development," MPRA Paper 40845, University Library of Munich, Germany.
    12. Luckstead, Jeff & Devadoss, Stephen & Mittelhammer, Ron, 2015. "Imperfect Competition between Florida and Sao Paulo (Brazil) Orange Juice Producers in the U.S. and European Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(1), January.
    13. Zsombor Pall & Oleksandr Perekhozhuk & Thomas Glauben & Sören Prehn & Ramona Teuber, 2014. "Residual demand measures of market power of Russian wheat exporters," Agricultural Economics, International Association of Agricultural Economists, vol. 45(3), pages 381-391, May.
    14. Imre Ferto & Jeremias Mate Balogh, 2016. "Are the major European wine exporters able to price discriminate across their EU extra wine export destinations?," IEHAS Discussion Papers 1624, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    15. Ramos, Maria Priscila, 2007. "Politique Commerciale, Qualité et Environnement: une Application aux Négociations Commerciales entre l’Union Européenne et le Mercosur," MPRA Paper 12640, University Library of Munich, Germany.
    16. Kerstin Uhl & Oleksandr Perekhozhuk & Thomas Glauben, 2016. "Price Discrimination in Russian Wheat Exports: Evidence from Firm-level Data," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 722-740, September.
    17. Páll, Zsombor, 2015. "Three essays on the Russian wheat export," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 80, number 80.
    18. Lavoie, Nathalie, 2002. "Price Discrimination in the Context of Vertical Differentiation: An Application to Canadian Wheat Exports," Research Reports 25210, University of Connecticut, Food Marketing Policy Center.
    19. Margherita Scoppola, 2007. "Economies of scale and market structure in international grain trade," Agricultural Economics, International Association of Agricultural Economists, vol. 37(2-3), pages 277-291, September.
    20. Luckstead, Jeff & Devadoss, Stephen & Mittelhammer, Ron C., 2013. "Strategic Trade Policies in the U.S. Orange Juice Market: Competition between Florida and São Paulo," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149668, Agricultural and Applied Economics Association.
    21. Dhamodharan, Mahalingam & Devadoss, Stephen & Luckstead, Jeff, 2016. "Imperfect Competition, Trade Policies, and Technological Changes in the Orange Juice Market," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(2), May.

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