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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 - UT - Université 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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    3. 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.
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    5. Anna Carbone, 2017. "Food supply chains: coordination governance and other shaping forces," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-23, December.
    6. Bonanno, Alessandro & Bimbo, Francesco & Costanigro, Marco & VIscecchia, Rosaria, 2018. "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.
    7. 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)".
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    9. 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.
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    More about this item

    Keywords

    production standards; vertical relationship; imperfect competition; technology choice;
    All these keywords.

    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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