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Vertical Price Leadership on Local Maize Markets in Benin

Author

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  • Kuiper, W. Erno
  • Lutz, Clemens
  • van Tilburg, Aad

Abstract

This paper considers vertical price relationships between wholesalers and retailers on five local maize markets in Benin. We show that if the common factor and the long-run disequilibrium error are not explicitly taken into account in testing the channel model, one can easily be wrong about how restrictions on the error-correction structure must be interpreted in terms of economic power in the channel. The empirical results show interesting differences between markets and reveal that retailers play a more prominent role in the price formation process than generally assumed in the literature. Retailers in the two major towns do not allow wholesalers to behave as vertical price leaders, but in the two larger rural centers, wholesalers involved in arbitrage among urban markets are able to influence price formation.

Suggested Citation

  • Kuiper, W. Erno & Lutz, Clemens & van Tilburg, Aad, 2002. "Vertical Price Leadership on Local Maize Markets in Benin," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24886, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae02:24886
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    References listed on IDEAS

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    More about this item

    Keywords

    Vertical price leadership; Marketing channels; Cointegration; Common Factor; Benin; Demand and Price Analysis; C32; D40; L10; O18; Q13;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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