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Production standards, competition and vertical relationship

Author

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  • Jianyu Yu
  • Zohra Bouamra-Mechemache

Abstract

This article investigates the collective choice of production standards by farmer and processor groups within a vertical food supply chain, taking into account their competition behaviours. We develop a general model to analyse the strategic motive of using standards to limit supply and shift rents between farmers and processors in the vertical chain. We find that a stringent standard can raise farmers' profit, but at the expense of processors. This is the case when the standard affects more variable costs than fixed cost of production, when the demand for the final product is inelastic, and when processors have a high degree of oligopoly power.

Suggested Citation

  • Jianyu Yu & Zohra Bouamra-Mechemache, 2016. "Production standards, competition and vertical relationship," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 43(1), pages 79-111.
    • Handle: RePEc:oup:erevae:v:43:y:2016:i:1:p:79-111.
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    File URL: http://hdl.handle.net/10.1093/erae/jbv004
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    Cited by:

    1. Eva Boonaert & Charline Depoorter & Axel Marx & Miet Maertens, 2024. "Carrots rather than sticks: Governance of voluntary sustainability standards and farmer welfare in Peru," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(6), pages 6471-6492, December.
    2. Valentina Raimondi & Chiara Falco & Daniele Curzi & Alessandro Olper, 2020. "Trade effects of geographical indication policy: The EU case," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(2), pages 330-356, June.
    3. Janne Bemelmans & Miet Maertens, 2025. "Implementation and effectiveness of corporate-driven smallholder cocoa certification schemes in Indonesia," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 13(1), pages 1-38, December.
    4. Tobias Chilla & Benedikt Fink & Richard Balling & Simon Reitmeier & Karola Schober, 2020. "The EU Food Label ‘Protected Geographical Indication’: Economic Implications and Their Spatial Dimension," Sustainability, MDPI, vol. 12(14), pages 1-21, July.
    5. Boonaert, Eva & Maertens, Miet, 2023. "Voluntary sustainability standards and farmer welfare: The pathways to success?," Food Policy, Elsevier, vol. 121(C).
    6. Anna Carbone, 2017. "Erratum to: Food supply chains: coordination governance and other shaping forces," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-1, December.
    7. Bonanno, Alessandro & Bimbo, Francesco & Costanigro, Marco & VIscecchia, Rosaria, "undated". "Do Geographic Indication Labels Pay off? Estimating GI’s implicit Price Dispersion in the Italian EVOO Market," 2018 Annual Meeting, August 5-7, Washington, D.C. 274203, Agricultural and Applied Economics Association.
    8. Olivier Bonroy & Christos Constantatos, 2015. "On the Economics of Labels: How Their Introduction Affects the Functioning of Markets and the Welfare of All Participants," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 239-259.
    9. Kopp, Thomas & Dalheimer, Bernhard & Alamsyah, Zulkifli & Yanita, Mirawati & Brümmer, Bernhard, 2019. "Can the Tripartite Rubber Council manipulate international rubber prices?," EFForTS Discussion Paper Series 30, University of Goettingen, Collaborative Research Centre 990 "EFForTS, Ecological and Socioeconomic Functions of Tropical Lowland Rainforest Transformation Systems (Sumatra, Indonesia)".
    10. Lijuan Yang, 2024. "The economics of standards: A literature review," Journal of Economic Surveys, Wiley Blackwell, vol. 38(3), pages 717-758, July.
    11. Annalisa Zezza & Federica Demaria & Maria Rosaria Pupo d'Andrea & Jo Swinnen & Giulia Meloni & Senne Vandevelde & Alessandro Olper & Daniele Curzi & Valentina Raimondi & Sophie Drogue, 2018. "Research for AGRI Committee - Agricultural trade: assessing reciprocity of standards," Working Papers hal-02787948, HAL.
    12. Alessandro Bonanno & Carlo Russo & Luisa Menapace, 2018. "Market power and bargaining in agrifood markets: A review of emerging topics and tools," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 6-23, December.
    13. Melnuk, Katerina & Ptashnyk, Svetlana, . "Теоретичні Засади Конкурентоспроможності Та Її Роль У Розвитку Підприємницької Діяльності," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 4(2).

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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