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Cooperative versus non-cooperative spatial competition for milk
Ist Teil von
European review of agricultural economics, 2011-03, Vol.38 (1), p.99-118
Ort / Verlag
Oxford: Oxford University Press and the Foundation for the European Review of Agricultural Economics
Erscheinungsjahr
2011
Link zum Volltext
Quelle
PAIS Index
Beschreibungen/Notizen
Although important, the spatial dimension is often neglected in studies of market power and competition in agricultural markets. This paper investigates spatial competition for raw milk between dairies under the presence of marketing cooperatives. Since observed in reality, our model is based on uniform delivered pricing and overlapping market areas. We compare spatial cooperative price matching with non-cooperative Hotelling-Smithies behaviour. Utilising a vector error correction model, we show that the observed low price transmission in Germany is in line with cooperative behaviour. This seems rational since it increases processors' profits. The abolition of the quota system may increase price transmission.