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The effect of buyer concentration on prices in the Australian wool market


  • Phil Simmons

    (Department of Agricultural and Resource Economics, University of New England, Armidale, Australia, 2351)

  • Phillip Hansen

    (Wool International, Parkville, Australia)


A theoretical model of the wool market that distinguishes between large and small buyers is developed. The model forecasts that “large” buyers with a cost advantage will increase grower prices providing there is competition from a periphery of small, relatively high cost buyers. Econometric estimates of premiums associated with buyer concentration, as measured by the Herfindahl Index, are obtained using hedonic price analysis. The results are consistent with theory, and it is concluded that increased buyer concentration favors growers providing a “periphery” of small competitive firms remains intact. © 1997 John Wiley & Sons, Inc.

Suggested Citation

  • Phil Simmons & Phillip Hansen, 1997. "The effect of buyer concentration on prices in the Australian wool market," Agribusiness, John Wiley & Sons, Ltd., vol. 13(4), pages 423-430.
  • Handle: RePEc:wly:agribz:v:13:y:1997:i:4:p:423-430
    DOI: 10.1002/(SICI)1520-6297(199707/08)13:4<423::AID-AGR8>3.0.CO;2-0

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    References listed on IDEAS

    1. Vlastuin, Chris, 1988. "The Efficiency of Price Discovery at Wool Auctions," 1988 Conference (32nd), February 8-11, 1988, Melbourne, Australia 144366, Australian Agricultural and Resource Economics Society.
    2. Hanson, Phillip & Simmons, Phil, 1995. "Measures of Buyer Concentration in the Australian Wool Market," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 63(02), August.
    3. Jackson, Brenda & Spinks, Murray, 1982. "Price Effects Of Wool Marketing Innovations: Some Empirical Evidence," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 26(01), April.
    4. Simmons, Phil, 1980. "Determination of Grade Prices for Wool," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 48(01), April.
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    Cited by:

    1. repec:oup:revage:v:28:y:2006:i:4:p:531-542. is not listed on IDEAS
    2. Halil Fidan, 2004. "Quality Level and Price in Turkish Durum Wheat Market," Quality & Quantity: International Journal of Methodology, Springer, vol. 38(3), pages 319-329, June.
    3. Ares, J.O., 2007. "Systems valuing of natural capital and investment in extensive pastoral systems: Lessons from the Patagonian case," Ecological Economics, Elsevier, vol. 62(1), pages 162-173, April.
    4. Waschik, Robert & Fraser, Iain, 2007. "A computable general equilibrium analysis of export taxes in the Australian wool industry," Economic Modelling, Elsevier, vol. 24(4), pages 712-736, July.
    5. Raper, Kellie Curry & Cheney, Laura Martin & Punjabi, Meeta, 2000. "Assessing The Impact Of A Hog Slaughter Plant Closing: The Thorn Apple Valley Case," Staff Papers 11658, Michigan State University, Department of Agricultural, Food, and Resource Economics.

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