Spatial Competition In A Mixed Market - The Case Of Milk Processors

The spatial dimension of the raw milk market facilitates the exercise of oligopsonistic power of milk processors towards farmers. At the same time, the market is characterised by a high share of processing cooperatives (coops). Hence, coops compete with investor-owned firms (IOFs) in a mixed market. Assuming uniform delivered pricing, we theoretically analyse spatial competition in a mixed market. Our theoretical and empirical results for Bavarian milk processors confirm the so-called “competitive yardstick effect”, i.e. coops can mitigate the oligopsony power of IOFs. In our theoretical model, the strength of this effect depends on the behaviour of IOFs.


Issue Date:
Aug 29 2017
Publication Type:
Conference Paper/ Presentation
Language:
English
Total Pages:
13




 Record created 2017-08-01, last modified 2017-08-29

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