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The Effect of Farmer Market Power on the Degree of Farm Retail Price Transmission: A Simulation Model with an Application to the Dutch Ware Potato Supply Chain

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  • Tsion Taye Assefa
  • W. Erno Kuiper
  • Miranda P.M. Meuwissen

Abstract

ABSTRACT A classic oligopoly/oligopsony model is developed to assess the degree of price transmission in a two‐stage farmer–retailer supply chain. A simulation experiment based on data of the Dutch ware potato sector illustrates how price transmission may become imperfect and asymmetric as a consequence of retailer oligopsony power in the sense that farm price decreases are only partially passed on to consumers whereas farm price increases are more than fully transmitted. Oligopoly power by farmers to level their bargaining power vis‐à‐vis the retailers may even make the degree of price transmission worse.

Suggested Citation

  • Tsion Taye Assefa & W. Erno Kuiper & Miranda P.M. Meuwissen, 2014. "The Effect of Farmer Market Power on the Degree of Farm Retail Price Transmission: A Simulation Model with an Application to the Dutch Ware Potato Supply Chain," Agribusiness, John Wiley & Sons, Ltd., vol. 30(4), pages 424-437, September.
    • Handle: RePEc:wly:agribz:v:30:y:2014:i:4:p:424-437
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    File URL: http://hdl.handle.net/10.1002/agr.21371
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    Cited by:

    1. Maximilian Koppenberg & Stefan Hirsch, 2022. "Output market power and firm characteristics in dairy processing: Evidence from three EU countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(2), pages 490-517, June.
    2. Federica Di Marcantonio & Pavel Ciaian & Vicente Castellanos, 2018. "Unfair trading practices in the dairy farm sector: Evidence from selected EU regions," JRC Research Reports JRC112770, Joint Research Centre.
    3. Di Marcantonio, F. & Ciaian, P. & Castellanos, V., 2018. "Unfair trading practices in the dairy farm sector: Insights from an EU field survey," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275886, International Association of Agricultural Economists.
    4. Yanan Yu & Yong He & Xuan Zhao & Li Zhou, 2022. "Certify or not? An analysis of organic food supply chain with competing suppliers," Annals of Operations Research, Springer, vol. 314(2), pages 645-675, July.
    5. Michał Gazdecki & Grzegorz Leszczyński & Marek Zieliński, 2021. "Food Sector as an Interactive Business World: A Framework for Research on Innovations," Energies, MDPI, vol. 14(11), pages 1-19, June.
    6. Onegina, Viktoriya & Megits, Nikolay & Kravchenko, Olha & Kravchenko, Yuliia, 2022. "Price transmission in milk supply chain in Ukraine," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 8(1), March.
    7. Santeramo, Fabio Gaetano & von Cramon-Taubadel, Stephan, 2016. "On perishability and Vertical Price Transmission: empirical evidences from Italy," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(2), September.

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