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Information Sharing and Oligopoly in Agricultural Markets: The Role of Bargaining Associations

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  • Brent Hueth
  • Philippe Marcoul

Abstract

We study incentives for information sharing (about uncertain future demand for final output) among firms in imperfectly competitive markets for farm output. Information sharing generally leads to increases in expected total welfare but may reduce expected firm profits. Even when expected firm profits increase, information sharing does not represent equilibrium behavior because firms face a prisoner's dilemma in which it is privately rational for each firm to withhold information, given that other firms report truthfully. This equilibrium can be overcome if firms commit to simultaneously reporting their information and if reports are verifiable. We argue that agricultural bargaining associations serve both these roles.

Suggested Citation

  • Brent Hueth & Philippe Marcoul, 2002. "Information Sharing and Oligopoly in Agricultural Markets: The Role of Bargaining Associations," Center for Agricultural and Rural Development (CARD) Publications 02-wp313, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:02-wp313
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    Cited by:

    1. Hueth Brent & Marcoul Philippe, 2003. "An Essay on Cooperative Bargaining in U.S. Agricultural Markets," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 1(1), pages 1-15, March.
    2. Natacha Fauvet & Jean-Christophe Pereau, 2014. "Nutrient Allowances Market and Wetland Abatement," Working Papers 2014.06, FAERE - French Association of Environmental and Resource Economists.
    3. Chin, Ming-Chin & Weaver, Robert D., 2004. "Forward Contracting Specification Through Collective Bargaining," 2004 Annual meeting, August 1-4, Denver, CO 20006, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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