Revisiting Concentration in Food and Agricultural Supply Chains: The Welfare Implications of Market Power in a Complementary Input Sector

We explore how market power in a complementary input sector compares to that in a downstream sector for producer and consumer welfare. We develop a model of a homogeneous product market encompassing bilateral and complementary relationships. Our main finding is that market power exercised by the supplier of a complementary input generates greater negative welfare effects than the same level of market power exercised by downstream firms. We provide a discussion of the implications of the results for policy in the context of current problems in the Canadian grain-handling and transportation system.

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Journal Article
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Journal of Agricultural and Resource Economics, Volume 40, Number 2
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 Record created 2017-04-01, last modified 2018-01-23

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