IDEAS home Printed from https://ideas.repec.org/a/zbw/espost/242476.html
   My bibliography  Save this article

Market imperfections within the European wheat value chain: The case of France and the United Kingdom

Author

Listed:
  • Čechura, Lukáš
  • Jamali Jaghdani, Tinoush

Abstract

The focus of this paper is on the analysis of market imperfections in the French and U.K. wheat value chains. We used mark-up and mark-down models and stochastic frontier analysis to estimate the degree of market imperfections in two completely different wheat-to-bread chains for two stages/sectors—milling and baking. Our results reveal some degree of market imperfections within the input and output markets for both the milling and baking sectors in France and the United Kingdom. However, the abuse of bargaining power is especially pronounced in the input market for the second stage of wheat processing, particularly in the French baking sector. However, we did not observe the expected positive association between the degree of market imperfections and company size except for a group of middle, large, and very large companies within the millers’ input market. Small companies indicate considerably high values of “Lerner”/Lerner indices, suggesting a benefit from other sources of competitive advantage (such as quality, niche markets, etc.).

Suggested Citation

  • Čechura, Lukáš & Jamali Jaghdani, Tinoush, 2021. "Market imperfections within the European wheat value chain: The case of France and the United Kingdom," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 11(9).
    • Handle: RePEc:zbw:espost:242476
    DOI: 10.3390/agriculture11090838
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/242476/1/Cechura_2021_Market_imperfections.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.3390/agriculture11090838?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Raushan Bokusheva & Lukáš Čechura, 2017. "Evaluating dynamics, sources and drivers of productivity growth at the farm level," OECD Food, Agriculture and Fisheries Papers 106, OECD Publishing.
    2. Richard J. Sexton, 2000. "Industrialization and Consolidation in the U.S. Food Sector: Implications for Competition and Welfare," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(5), pages 1087-1104.
    3. NES Kjersti & COLEN Liesbeth & CIAIAN Pavel, 2021. "Market power in food industry in selected EU Member States," JRC Research Reports JRC125087, Joint Research Centre.
    4. Kyle Stiegert, 2002. "The producer, the baker, and a test of the mill price-taker," Applied Economics Letters, Taylor & Francis Journals, vol. 9(6), pages 365-368.
    5. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
    6. Steve McCorriston, 2002. "Why should imperfect competition matter to agricultural economists?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 29(3), pages 349-371, July.
    7. Jan De Loecker & Frederic Warzynski, 2012. "Markups and Firm-Level Export Status," American Economic Review, American Economic Association, vol. 102(6), pages 2437-2471, October.
    8. Oleksandr Perekhozhuk & Thomas Glauben & Michael Grings & Ramona Teuber, 2017. "Approaches And Methods For The Econometric Analysis Of Market Power: A Survey And Empirical Comparison," Journal of Economic Surveys, Wiley Blackwell, vol. 31(1), pages 303-325, February.
    9. Jamali Jaghdani, Tinoush & Čechura, Lukáš & Ólafsdóttir, Guðrún & Thakur, Maitri, 2020. "Market Power in Norwegian Salmon Industry," 60th Annual Conference, Halle/ Saale, Germany, September 23-25, 2020 305590, German Association of Agricultural Economists (GEWISOLA).
    10. Subal Kumbhakar & Sjur Baardsen & Gudbrand Lien, 2012. "A New Method for Estimating Market Power with an Application to Norwegian Sawmilling," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(2), pages 109-129, March.
    11. Aaron Grau & Heinrich Hockmann, 2018. "Market power in the German dairy value chain," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 93-111, December.
    12. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    13. Wilson, William W. & Orr, David, 1989. "The Grain Marketing System and Wheat Quality in Australia," Miscellaneous Publications 257269, North Dakota State University, Department of Agribusiness and Applied Economics.
    14. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
    15. Wilson, William W. & Hill, Lowell D., 1989. "The Grain Marketing System and Wheat Quality in France," Miscellaneous Publications 257270, North Dakota State University, Department of Agribusiness and Applied Economics.
    16. Gary W. Brester & Barry K. Goodwin, 1993. "Vertical and Horizontal Price Linkages and Market Concentration in the U.S. Wheat Milling Industry," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(3), pages 507-519.
    17. Christopher J. O'Donnell & Garry R. Griffith & John J. Nightingale & Roley R. Piggott, 2007. "Testing for market power in the Australian grains and oilseeds industries," Agribusiness, John Wiley & Sons, Ltd., vol. 23(3), pages 349-376.
    18. Jamali Jaghdani, Tinoush & Čechura, Lukáš & Ólafsdóttir, Guðrún & Thakur, Maitri, 2020. "Market Power in Norwegian Salmon Industry," 60th Annual Conference, Halle/ Saale, Germany, September 23-25, 2020 305590, German Association of Agricultural Economists (GEWISOLA).
    19. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    20. Steven Berry & Martin Gaynor & Fiona Scott Morton, 2019. "Do Increasing Markups Matter? Lessons from Empirical Industrial Organization," Journal of Economic Perspectives, American Economic Association, vol. 33(3), pages 44-68, Summer.
    21. Johan Swinnen & Alessandro Olper & Senne Vandevelde, 2021. "From unfair prices to unfair trading practices: Political economy, value chains and 21st century agri‐food policy," Agricultural Economics, International Association of Agricultural Economists, vol. 52(5), pages 771-788, September.
    22. Carlo Russo & Rachael E. Goodhue & Richard J. Sexton, 2011. "Agricultural Support Policies in Imperfectly Competitive Markets: Why Market Power Matters in Policy Design," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(5), pages 1328-1340.
    23. Russo, Carlo, 2007. "Deficiency Payments and Market Power: Effects of Imperfect Competition on Welfare Distribution and Decoupling," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9767, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    24. repec:zbw:iamost:276233 is not listed on IDEAS
    25. Daniele Cavicchioli, 2018. "Detecting Market Power Along Food Supply Chains: Evidence and Methodological Insights from the Fluid Milk Sector in Italy," Agriculture, MDPI, vol. 8(12), pages 1-22, December.
    26. Sheldon, Ian M., 2017. "The Competitiveness Of Agricultural Product And Input Markets: A Review And Synthesis Of Recent Research," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 49(1), pages 1-44, February.
    27. Perekhozhuk, O. & Chezhia, G. & Glauben, T., 2018. "Testing for oligopsony power in the Kazakh grain processing industry: A Hall approach," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275964, International Association of Agricultural Economists.
    28. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057, Elsevier.
    29. Grau, Aaron, 2018. "Market power in the German dairy supply chain," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 90, number 90.
    30. Ollinger, Michael & Nguyen, Sang V. & Blayney, Donald P. & Chambers, William & Nelson, Kenneth B., 2005. "Structural Change in the Meat, Poultry, Dairy and Grain Processing Industries," Economic Research Report 7217, United States Department of Agriculture, Economic Research Service.
    31. Grau, Aaron, 2018. "Market power in the German dairy supply chain," Studies on the Agricultural and Food Sector in Transition Economies 276233, Institute of Agricultural Development in Transition Economies (IAMO).
    32. Habtu Tadesse Weldegebriel, 2004. "Imperfect Price Transmission: Is Market Power Really to Blame?," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(1), pages 101-114, March.
    33. Cavalleri, Maria Chiara & Eliet, Alice & McAdam, Peter & Petroulakis, Filippos & Soares, Ana & Vansteenkiste, Isabel, 2019. "Concentration, market power and dynamism in the euro area," Working Paper Series 2253, European Central Bank.
    34. Richard J. Sexton & Tian Xia, 2018. "Increasing Concentration in the Agricultural Supply Chain: Implications for Market Power and Sector Performance," Annual Review of Resource Economics, Annual Reviews, vol. 10(1), pages 229-251, October.
    35. A. P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 1(3), pages 157-175.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Barling & Antonella Samoggia & Gudrun Olafsdottir, 2022. "Dynamics of Food Value Chains: Resilience, Fairness and Sustainability," Agriculture, MDPI, vol. 12(5), pages 1-5, May.
    2. McGarraghy, Seán & Olafsdottir, Gudrun & Kazakov, Rossen & Huber, Élise & Loveluck, William & Gudbrandsdottir, Ingunn Y. & Čechura, Lukáš & Esposito, Gianandrea & Samoggia, Antonella & Aubert, Pierre-, 2022. "Conceptual system dynamics and agent-based modelling simulation of interorganisational fairness in food value chains: Research agenda and case studies," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 12(2).
    3. Seán McGarraghy & Gudrun Olafsdottir & Rossen Kazakov & Élise Huber & William Loveluck & Ingunn Y. Gudbrandsdottir & Lukáš Čechura & Gianandrea Esposito & Antonella Samoggia & Pierre-Marie Aubert & Da, 2022. "Conceptual System Dynamics and Agent-Based Modelling Simulation of Interorganisational Fairness in Food Value Chains: Research Agenda and Case Studies," Agriculture, MDPI, vol. 12(2), pages 1-30, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lukáš Čechura & Tinoush Jamali Jaghdani, 2021. "Market Imperfections within the European Wheat Value Chain: The Case of France and the United Kingdom," Agriculture, MDPI, vol. 11(9), pages 1-21, August.
    2. 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.
    3. Mydland, Ørjan & Størdal, Ståle & Kumbhakar, Subal C. & Lien, Gudbrand, 2022. "Modeling markups and its determinants: The case of Norwegian industries and regions," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 252-262.
    4. Koppenberg, Maximilian & Hirsch, Stefan, 2020. "Comparing methods for markup estimation with an application to EU food retailing," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304272, Agricultural and Applied Economics Association.
    5. Maximilian Koppenberg & Stefan Hirsch, 2022. "Markup estimation: A comparison of contemporary methods at the example of European food retailers," Agribusiness, John Wiley & Sons, Ltd., vol. 38(1), pages 108-133, January.
    6. Lukáš Čechura & Antonella Samoggia & Tinoush Jamali Jaghdani, 2024. "Concentration, market imperfections, and interbranch organization in the Italian processed tomato supply chain," Agricultural Economics, International Association of Agricultural Economists, vol. 55(4), pages 603-620, July.
    7. 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.
    8. Bhattacharyya, Aditi & Kutlu, Levent & Sickles, Robin C., 2018. "Pricing Inputs and Outputs: Market prices versus shadow prices, market power, and welfare analysis," Working Papers 18-009, Rice University, Department of Economics.
    9. Čechura, Lukáš & Jamali Jaghdani, Tinoush & Samoggia, Antonella, 2020. "Imperfections in Italian Tomato Food Chain," 60th Annual Conference, Halle/ Saale, Germany, September 23-25, 2020 305591, German Association of Agricultural Economists (GEWISOLA).
    10. Stefan Hirsch & David Lanter & Robert Finger, 2021. "Profitability and profit persistence in EU food retailing: Differences between top competitors and fringe firms," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 235-263, April.
    11. Daniele Cavicchioli & Luca Cacchiarelli & Alessandro Sorrentino & Roberto Pretolani, 2022. "Should We Cry over the Spilt Milk? Market Power and Structural Change along Dairy Supply Chains in EU Countries," Sustainability, MDPI, vol. 14(8), pages 1-18, April.
    12. Hirsch, Stefan & Koppenberg, Maximilian, 2020. "Power imbalances in French food retailing: Evidence from a production function approach to estimate market power," Economics Letters, Elsevier, vol. 194(C).
    13. Maes, Dries & Vancauteren, Mark & Van Passel, Steven, 2019. "Investigating market power in the Belgian pork production chain," Review of Agricultural, Food and Environmental Studies, Institut National de la Recherche Agronomique (INRA), vol. 100(01-4), November.
    14. Rizwan Abbas & Gehad Abdullah Amran & Irshad Hussain & Shengjun Ma, 2022. "RETRACTED: A Soft Computing View for the Scientific Categorization of Vegetable Supply Chain Issues," Logistics, MDPI, vol. 6(3), pages 1-17, June.
    15. Soregaroli, Claudio & Sckokai, Paolo & Moro, Daniele, 2011. "Agricultural policy modelling under imperfect competition," Journal of Policy Modeling, Elsevier, vol. 33(2), pages 195-212, March.
    16. Hirsch, Stefan & Barissoul, Ayoub & Möhring, Niklas & Koppenberg, Maximilian, 2024. "Market power, profitability and the decision to exit organic dairy farming in the EU," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344258, International Association of Agricultural Economists (IAAE).
    17. Christian Reiner & Christian Bellak, 2023. "Hat die ökonomische Macht von Unternehmen in Österreich zugenommen? Teil 2," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 49(2), pages 17-76.
    18. Dries Maes & Mark Vancauteren & Steven Passel, 2019. "Investigating market power in the Belgian pork production chain," Review of Agricultural, Food and Environmental Studies, Springer, vol. 100(1), pages 93-117, December.
    19. Dries Maes & Mark Vancauteren & Steven Van Passel, 2019. "Investigating market power in the Belgian porkproduction chain," Review of Agricultural, Food and Environmental Studies, INRA Department of Economics, vol. 100(1-4), pages 93-117.
    20. Robert Germeshausen & Timo Panke & Heike Wetzel, 2020. "Firm characteristics and the ability to exercise market power: empirical evidence from the iron ore market," Empirical Economics, Springer, vol. 58(5), pages 2223-2247, May.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:espost:242476. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zbwkide.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.