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Production standards, competition and vertical relationship

Author

Listed:
  • Zohra Bouamra-Mechemache

    (GREMAQ - Groupe de recherche en économie mathématique et quantitative - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

  • Yu Jianyu

    (Research Institute of Economics and Management - Partenaires INRAE)

Abstract

his paper investigates the collective choice of production standards by farmer and pro- cessor groups within a vertical food supply chain, taking into account their competition behaviors. In a context in which raising standards cannot translate into a direct price premium to consumers, we develop a general model to analyze the strategic motive of us- ing standards to limit supply and shift rents among farmers and processors in the vertical chain. We find that such a motive depends on farmers' cost structure, final demand char- acteristics, and processors' competition patterns. In particular, farmers prefer a stringent standard when the standard involves creating greater diseconomies of scale in production and when the demand for the final product is inelastic. However, processors only prefer a stringent standard in the presence of oligopsony competition.

Suggested Citation

  • Zohra Bouamra-Mechemache & Yu Jianyu, 2013. "Production standards, competition and vertical relationship," Post-Print hal-02746623, HAL.
    • Handle: RePEc:hal:journl:hal-02746623
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    2. Eva Boonaert & Charline Depoorter & Axel Marx & Miet Maertens, 2024. "Carrots rather than sticks: Governance of voluntary sustainability standards and farmer welfare in Peru," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(6), pages 6471-6492, December.
    3. Valentina Raimondi & Chiara Falco & Daniele Curzi & Alessandro Olper, 2020. "Trade effects of geographical indication policy: The EU case," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(2), pages 330-356, June.
    4. Janne Bemelmans & Miet Maertens, 2025. "Implementation and effectiveness of corporate-driven smallholder cocoa certification schemes in Indonesia," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 13(1), pages 1-38, December.
    5. Tobias Chilla & Benedikt Fink & Richard Balling & Simon Reitmeier & Karola Schober, 2020. "The EU Food Label ‘Protected Geographical Indication’: Economic Implications and Their Spatial Dimension," Sustainability, MDPI, vol. 12(14), pages 1-21, July.
    6. Boonaert, Eva & Maertens, Miet, 2023. "Voluntary sustainability standards and farmer welfare: The pathways to success?," Food Policy, Elsevier, vol. 121(C).
    7. Anna Carbone, 2017. "Erratum to: Food supply chains: coordination governance and other shaping forces," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-1, December.
    8. Bonanno, Alessandro & Bimbo, Francesco & Costanigro, Marco & VIscecchia, Rosaria, "undated". "Do Geographic Indication Labels Pay off? Estimating GI’s implicit Price Dispersion in the Italian EVOO Market," 2018 Annual Meeting, August 5-7, Washington, D.C. 274203, Agricultural and Applied Economics Association.
    9. Olivier Bonroy & Christos Constantatos, 2015. "On the Economics of Labels: How Their Introduction Affects the Functioning of Markets and the Welfare of All Participants," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 239-259.
    10. Kopp, Thomas & Dalheimer, Bernhard & Alamsyah, Zulkifli & Yanita, Mirawati & Brümmer, Bernhard, 2019. "Can the Tripartite Rubber Council manipulate international rubber prices?," EFForTS Discussion Paper Series 30, University of Goettingen, Collaborative Research Centre 990 "EFForTS, Ecological and Socioeconomic Functions of Tropical Lowland Rainforest Transformation Systems (Sumatra, Indonesia)".
    11. Lijuan Yang, 2024. "The economics of standards: A literature review," Journal of Economic Surveys, Wiley Blackwell, vol. 38(3), pages 717-758, July.
    12. Annalisa Zezza & Federica Demaria & Maria Rosaria Pupo d'Andrea & Jo Swinnen & Giulia Meloni & Senne Vandevelde & Alessandro Olper & Daniele Curzi & Valentina Raimondi & Sophie Drogue, 2018. "Research for AGRI Committee - Agricultural trade: assessing reciprocity of standards," Working Papers hal-02787948, HAL.
    13. Alessandro Bonanno & Carlo Russo & Luisa Menapace, 2018. "Market power and bargaining in agrifood markets: A review of emerging topics and tools," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 6-23, December.
    14. Melnuk, Katerina & Ptashnyk, Svetlana, . "Теоретичні Засади Конкурентоспроможності Та Її Роль У Розвитку Підприємницької Діяльності," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 4(2).

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    Keywords

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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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