Does The Existence Of Market Power Affect Marketing Loan Programs?
The paper analyzes the effects that a demand with oligopsonistic power may have on the operation of a marketing loan program (especially on the program cost). We measure these effects using a model for the US peanut market where evidence indicates that the demand is highly concentrated. Our results show that the USDA strategy of keeping a repayment rate above the market-clearing price set by the demand is not a sustainable strategy, since the demand can follow a hand-to-mouth strategy, postponing its purchases of peanuts, letting USDA accumulate stocks and forcing it to reduce the price.
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- Grossman, Herschel I, 1974. "The Nature of Quantities in Market Disequilibrium," American Economic Review, American Economic Association, vol. 64(3), pages 509-514, June.
- Dale M. Heien, 1980. "Markup Pricing in a Dynamic Model of the Food Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(1), pages 10-18.
- Catherine A. Durham & Richard J. Sexton, 1992. "Oligopsony Potential in Agriculture: Residual Supply Estimation in California's Processing Tomato Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(4), pages 962-972.
- Salanie, Bernard, 1991. "Wage and Price Adjustment in a Multimarket Disequilibrium Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 6(1), pages 1-15, Jan.-Marc.
- Richard T. Rogers & Richard J. Sexton, 1994. "Assessing the Importance of Oligopsony Power in Agricultural Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(5), pages 1143-1150.
- B. Wade Brorsen & Jean-Paul Chavas & Warren R. Grant & L. D. Schnake, 1985. "Marketing Margins and Price Uncertainty: The Case of the U.S. Wheat Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(3), pages 521-528.
- Westcott, Paul C. & Price, J. Michael, 2001. "Analysis Of The U.S. Commodity Loan Program With Marketing Loan Provisions," Agricultural Economics Reports 34035, United States Department of Agriculture, Economic Research Service.
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