Hostname: page-component-78c5997874-8bhkd Total loading time: 0 Render date: 2024-11-15T10:25:16.987Z Has data issue: false hasContentIssue false
  • English
  • Français

Price Bargaining Without Supply Control

Published online by Cambridge University Press:  15 September 2016

Henry W. Kinnucan
Henry W. Kinnucan*
Affiliation:
Department of Agricultural Economics and Rural Sociology, Auburn University
Get access

Abstract

Primary food producers are permitted to bargain as a group for higher prices. Supply response, however, is critical to the long-run success of producer cartels. This article presents a model that elucidates that role of supply response in agricultural price bargaining when no overt action is taken to limit quantity and participation in the cartel is voluntary. Free-riding, for example, is seen as having a dual nature: it undermines the cartel's influence at the negotiating table but it enhances the cartel's ability to sustain a negotiated price increase by attenuating supply response. That price bargaining can result in significant transfers from processors to producers when demand is inelastic and supply is uncontrolled is highlighted in the empirical application.

Type
Articles
Information
Agricultural and Resource Economics Review , Volume 24 , Issue 1 , April 1995 , pp. 119 - 127
Copyright
Copyright © 1995 Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Allen, Bill. The Catfish Institute. Belzoni, Mississippi, personal communication, 9 December 1994 and 16 February 1995.Google Scholar
Branch, W. and Tilley, D.S. “Catfish Producer Harvest Response to Production and Asymmetric Price Risk.” Southern Journal of Agricultural Economics 23 (1991): 29–37.Google Scholar
Breimyer, H.F. “The Economics of Agricultural Marketing: A Survey.” Review of Marketing and Agricultural Economics. 41 (1973): 115–165.Google Scholar
Bunje, R.B. Cooperative Farm Bargaining and Price Negotiations. USDA, ACS, Cooperative Information Report 26, 1980.Google Scholar
Chiang, A.C. Fundamental Methods of Mathematical Economics. Third Edition. New York: McGraw-Hill Book Company, 1984.Google Scholar
Frederick, D.A. “Fisheries Marketing Cooperatives: An Antitrust Perspective.” Journal of Agricultural Taxation and Law. 34 (1987): 47–63.Google Scholar
French, B.C. “Farm Price Estimation When There is Bargaining: The Case of Processed Fruit and Vegetables.” Western Journal of Agricultural Economics. 12 (1987): 17–26.Google Scholar
Gardner, B.L. “The Farm-Retail Price Spread in a Competitive Food Industry.” American Journal of Agricultural Economics. 57 (1975): 399–409.Google Scholar
Greene, W.H. LIMDEP Version 6.0 User's Manual and Reference Guide. New York: Econometric Software, Inc., 1992.Google Scholar
Helmberger, P.G. and Hoos, S. Cooperative Bargaining in Agriculture: Grower-Processor Markets for Fruits and Vegetables. Department of Agricultural and Resource Economics, University of California, Berkeley, 1965.Google Scholar
Henderson, J.M. and Quandt, R.E. Microeconomic Theory: A Mathematical Approach. New York: McGraw-Hill Book Co., 1980.Google Scholar
Hildreth, C. and Jarrett, F.G. A Statistical Study of Livestock Production and Marketing. Cowles Commission Monograph 15. New York: John Wiley and Sons, Inc, 1955.CrossRefGoogle Scholar
Iskow, J. and Sexton, R.J. Bargaining Associations in Grower-Processor Markets for Fruits and Vegetables, U.S. Department of Agriculture, ACS Research Report No. 104, Washington, D.C., 1991.Google Scholar
Kinnucan, H.W. and Nelson, R.G. “Vertical Control and the Farm-Retail Price Spread for Eggs.” Review of Agricultural Economics. 15 (1993): 473–82.Google Scholar
Kinnucan, H.S. Sindelar, Wineholt, D., and Hatch, U. “Processor Demand and Price-Markup Functions for Catfish: A Disaggregated Analysis with Implications for the Offflavor Problem.” Southern Journal of Agricultural Economics. 20 (1988): 81–91.Google Scholar
Kinnucan, H. and Sullivan, G. “Monopsonistic Food Processing and Farm Prices: The Case of the West Alabama Catfish Industry.” Southern Journal of Agricultural Economics. 18 (1986): 15–24.Google Scholar
Kmenta, J. Elements of Econometrics (second edition). New York: Macmillan Publishing Company, 1986.Google Scholar
Ladd, G.W. “A Model of a Bargaining Cooperative.” American Journal of Agricultural Economics. 56 (1974): 509–19.Google Scholar
Muth, R.E. “The Derived Demand Curve for a Productive Factor and the Industry Supply Curve.” Oxford Economic Papers. 16 (1965): 221–34.Google Scholar
Nyankori, J.C.O. “Price Transmission in the Catfish Industry with Specific Emphasis on the Role of Processing Cooperatives.” Southern Journal of Agricultural Economics. 23 (1991): 247–52.Google Scholar
Sexton, R.J. “A Survey of Noncooperative Game Theory with Reference to Agricultural Markets: Part 2, Potential Applications to Agriculture.” Review of Marketing and Agricultural Economics. 62 (1994): 183–200.Google Scholar
The Catfish Journal, various issues, 1989–94.Google Scholar
USDA, ERS. Aquaculture Situation and Outlook Report. AQS-12, March 1994.Google Scholar
USDC, Bureau of Census. Statistical Abstract of the United States 1994. 114th edition, January 1994.Google Scholar
USDA, BLS. Detailed CPI Report. Various issues, 1986–94.Google Scholar
Wohlgenant, M.K. and Mullen, J.D. “Modeling the Farm-Retail Price Spread for Beef.” Western Journal of Agricultural Economics. 12 (1987): 120–125.Google Scholar
Zidack, W.H. Kinnucan, and Hatch, U. “Wholesale- and Farm-Level Impacts of Generic Advertising: The Case of Catfish.” Applied Economics. 24 (1992): 959–68.Google Scholar