Farmers,Middlemen and Exporters: A Model of Market Power,Pricing and Welfare in a Vertical Supply Chain |
| |
Authors: | Kjetil Bjorvatn Anna B. Milford Lars Sørgard |
| |
Affiliation: | 1. Department of Economics, NHH Norwegian School of Economics, Bergen, Norway;2. Norwegian Agricultural Economics Research Institute, Statens Hus, Bergen, Norway |
| |
Abstract: | Markets for cash‐crops in developing countries are typically characterized by a concentration of buyer power at different levels of the supply chain. For instance, small‐scale coffee farmers sell their produce to a middleman, who in turn sells the coffee onward to an exporter, often a foreign multinational, with monopsony power in the hands of the purchasers at both levels. We analyze pricing behavior and welfare with different assumptions regarding market power. In particular, we show that a more powerful exporter is likely to benefit the producers and may even lead to higher welfare for the producer country as a whole. |
| |
Keywords: | |
|
|