Microeconomics of Agricultural Grading: Impacts on the Marketing Channel
In this paper I focus on how grade prices affect the provision of product transformation skills in the food marketing system. A self-protection model is used to show how resources are allocated to protect the potential value of commodities in the marketing channel. Resource allocations may be complementary, and complementarity may be exploited to expand an industry. Further, uncertainty concerning skill levels may inhibit expansion. Because two primary objectives of agricultural extension involve facilitating skill acquisition and disseminating market information, the model confirms roles for extension personnel. The optimal location of transformation skills in a sequence of operations is also studied. Key words: grading, industry structure, multiple equilibria, quality, self-protection.
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|Date of creation:||01 Nov 1995|
|Publication status:||Published in American Journal of Agricultural Economics, November 1995, vol. 77 no. 4, pp. 980-989|
|Contact details of provider:|| Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070|
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Web page: http://www.econ.iastate.edu
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