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Vertical Control and the Farm-Retail Price Spread for EGGS

Author

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  • Henry W. Kinnucan
  • Robert G. Nelson

Abstract

Between 1973 and 1983, the portion of eggs produced under contracts or vertical integration increased from an estimated 62 percent to 88 percent. This article adduces and tests two hypotheses to explain the effects of the increased vertical control on industry performance. The results suggest that deficiencies in the market mechanism rather than anticompetitive factors are responsible for the increased vertical control. The farm-retail price spread for eggs between 1973 and 1983 declined 42 percent in real terms; about 58 percent of this decline is estimated to be attributable to increased vertical control.

Suggested Citation

  • Henry W. Kinnucan & Robert G. Nelson, 1993. "Vertical Control and the Farm-Retail Price Spread for EGGS," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(3), pages 473-482.
  • Handle: RePEc:oup:revage:v:15:y:1993:i:3:p:473-482.
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    File URL: http://hdl.handle.net/10.2307/1349482
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    Cited by:

    1. Kinnucan, Henry W., 1995. "Price Bargaining Without Supply Control," Agricultural and Resource Economics Review, Cambridge University Press, vol. 24(1), pages 119-127, April.
    2. Lee, Michelle & Unterschultz, James R. & Lerohl, Mel L., 2001. "Supply Chain Competency: Recipe For Cereal And Livestock Marketing In Alberta?," Project Report Series 24050, University of Alberta, Department of Resource Economics and Environmental Sociology.
    3. Martinez, Steve & Zering, Kelly, 1997. "Vertical Coordination and Consumer Welfare: The Case of the Pork Industry," Agricultural Economic Reports 262048, United States Department of Agriculture, Economic Research Service.
    4. Bhuyan, Sanjib, 2001. "Impact Of Vertical Mergers On Food Industry Profitability: An Empirical Evaluation," 2001 Annual meeting, August 5-8, Chicago, IL 20469, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Bhuyan, Sanjib, 2003. "What Determines Vertical Mergers in U.S. Food Manufacturing Industries?," 2003 Annual meeting, July 27-30, Montreal, Canada 22146, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Bhuyan, Sanjib, 2005. "Does Vertical Integration Effect Market Power? Evidence from U.S. Food Manufacturing Industries," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 37(1), pages 1-14, April.
    7. Richards, Timothy J. & Patterson, Paul M. & van Ispelen, Pieter, 1998. "Modeling Fresh Tomato Marketing Margins: Econometrics And Neural Networks," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(2), pages 1-14, October.

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