Imperfect competition in the fresh tomato industry
In this paper, we analyse the market power of the retail industry in the French tomato market. Following the methods developed in the New Empirical Industrial Organization, we develop a structural model of this industry. The analysis is based on detailed data on final consumption and prices at both shipper and consumer levels for two types of tomatoes in France. The structural model is composed of a system of demand equation and supply equation. Supply equation includes a term that represents the market power of the retail sector. We use different models of demand in order to test the robustness of our results. We show that i) elasticity of demand varies during the year ii) the retail sector exercise only a "moderate" market power iii) the estimated mark-up of the retail sector varies from 0 to about 0.13 €/kg depending on the period iv) the mark-up is thus small (3% in average) as compared to the consumer price which is mainly explained by cost of production. We conclude to a moderate exercise of market power of the retail sector in this sector.
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