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Production Standards, Competition and Vertical Relationship

Bouamra-Mechemache, Zohra and Jianyu, Yu (2013) Production Standards, Competition and Vertical Relationship. TSE Working Paper, n. 13-417, Toulouse

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This 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.

Item Type: Monograph (Working Paper)
Language: English
Date: April 2013
Place of Publication: Toulouse
Uncontrolled Keywords: Production standards, Vertical relationship, Imperfect competition, Technology choice
JEL Classification: L13 - Oligopoly and Other Imperfect Markets
Q13 - Agricultural Markets and Marketing; Cooperatives; Agribusiness
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 30 Jun 2016 12:43
Last Modified: 22 Apr 2020 14:05
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