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Cartel Pricing with Entry: the Experience of the Far West Marketing Order for Spearmint

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  • Balagtas, Joseph Valdes
  • Masters, William J.
  • Zimmer, Timothy

Abstract

This paper documents the remarkable experience of the Far West mint producers in the operation of their marketing order. From 1993 to 2002, the marketing order witnessed a dramatic reduction its share of the Scotch spearmint market, as well as a reduction in both its price. We apply a model of a cartel facing a competitive fringe to describe the fall in the marketing order price as a logical consequence of increased world production of spearmint oil. We estimate an econometric model of the marketing order price and find that a 1-percent change in the marketing order's market share corresponds to a 0.8 percent change in the marketing order price.

Suggested Citation

  • Balagtas, Joseph Valdes & Masters, William J. & Zimmer, Timothy, 2005. "Cartel Pricing with Entry: the Experience of the Far West Marketing Order for Spearmint," 2005 Annual meeting, July 24-27, Providence, RI 19328, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea05:19328
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    File URL: http://purl.umn.edu/19328
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    References listed on IDEAS

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    1. Peter Berck & Jeffrey M. Perloff, 1985. "A Dynamic Analysis of Marketing Orders, Voting, and Welfare," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(3), pages 487-496.
    2. Filson, Darren, et al, 2001. "Market Power and Cartel Formation: Theory and an Empirical Test," Journal of Law and Economics, University of Chicago Press, vol. 44(2), pages 465-480, October.
    3. Lee, Hyunok & Alston, Julian M. & Carman, Hoy F. & Sutton, William R., 1996. "Mandated Marketing Programs For California Commodities," Information Series 11919, University of California, Davis, Giannini Foundation.
    4. Kwoka, John E, Jr, 1977. "Pricing under Federal Milk Market Regulation," Economic Inquiry, Western Economic Association International, vol. 15(3), pages 367-384, July.
    5. John M. Crespi & Adriana Chacón-Cascante, 2004. "Do U.S. marketing orders have much market power? An examination of the Almond Board of California," Agribusiness, John Wiley & Sons, Ltd., vol. 20(1), pages 1-15.
    6. repec:cdl:agrebk:623332 is not listed on IDEAS
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    Keywords

    Marketing;

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