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Spatial Pricing and the Location of Processors in Agricultural Markets

  • Graubner, Marten
  • Balmann, Alfons
  • Sexton, Richard J.

Spatially dispersed production and processing, endemic for most agricultural or renewable resource markets, causes oligopsonistic competition. The possibility and use of spatial price discrimination in these markets is well documented. It is also well known that the location of processors relative to competitors crucially affects the intensity of competition. However, insights regarding the relation between spatial price discrimination and the spatial differentiation of firms are barely present because the simultaneous investigation of these issues is often intractable analytically. We use computational economics to study these problems under a general theoretical framework. For instance, we show whether and under which conditions firms choose to differentiate their locations and/or price strategies. Results are consistent with observations in agricultural markets.

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File URL: http://purl.umn.edu/114601
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Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114601.

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Date of creation: 2011
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Handle: RePEc:ags:eaae11:114601
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  2. AM Alvarez & EG Fidalgo & RJ Sexton & M Zhang, 2000. "Oligopsony power with uniform spatial pricing: theory and application to milk processing in Spain," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 27(3), pages 347-364, September.
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  16. Maria Paz Espinosa, 1992. "Delivered Pricing, FOB Pricing, and Collusion in Spatial Markets," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 64-85, Spring.
  17. Marten Graubner & Ines Koller & Klaus Salhofer & Alfons Balmann, 2011. "Cooperative versus non-cooperative spatial competition for milk," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 38(1), pages 99-118, March.
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