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An estimation of a price model of the high fructose corn syrup industry in the Unites States

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  • Garcia-Fuentes, Pablo
  • Kennedy, P. Lynn
  • Ferreira, Gustavo

Abstract

The current research develops a model of pricing in imperfectly competitive markets based on the Stackelberg price leadership behavior model to explain pricing strategies in the high fructose corn syrup (HFCS) and sugar industries in the United States. The model assumes that demanders of HFCS are represented by soft drinks and processed food manufactures that use HFCS as an input. It derives a reaction function for the price of HFCS and a conjectural variations function. The conjectural variations function suggests that the price of sugar is higher than the price of HFCS. The results show that the price of sugar plays an important role in the pricing strategy of the HFCS industry and that a unit increase in the price of sugar increases the price of HFCS by less than the unit increase in the price of sugar.

Suggested Citation

  • Garcia-Fuentes, Pablo & Kennedy, P. Lynn & Ferreira, Gustavo, 2017. "An estimation of a price model of the high fructose corn syrup industry in the Unites States," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252722, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saea17:252722
    DOI: 10.22004/ag.econ.252722
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    References listed on IDEAS

    as
    1. A. R. Barros, 1992. "Sugar Prices And High‐Fructose Corn Syrup Consumption In The United States," Journal of Agricultural Economics, Wiley Blackwell, vol. 43(1), pages 64-73, January.
    2. Kennedy, P. Lynn & Garcia-Fuentes, Pablo A., 2016. "A supply and demand estimation of the United States high fructose corn syrup market," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236100, Agricultural and Applied Economics Association.
    3. Hoy F. Carman, 1982. "A Trend Projection of High Fructose Corn Syrup Substitution for Sugar," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(4), pages 625-633.
    Full references (including those not matched with items on IDEAS)

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    1. Kennedy, P. Lynn & Garcia-Fuentes, Pablo A., 2016. "A supply and demand estimation of the United States high fructose corn syrup market," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236100, Agricultural and Applied Economics Association.
    2. Lopez, Rigoberto A. & Sepulveda, Jorge L., 1985. "Changes In The U.S. Demand For Sugar And Implications For Import Policies," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 14(2), pages 1-6, October.
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    Keywords

    Demand and Price Analysis;

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