The Agricultural Products Market in the Growing Demand for Industrial Uses: Relationship between Agriculture and the Food Industry

The vegetable and fruit market, which has traditionally been considered as a perfect competitive market, is now changing to an imperfect one in an economic environment marked by large-scale buyers and growing demand for industrial uses. Its economic evaluation has now emerged as an issue. This paper firstly reviews evaluations for oligopoly, oligopsony and vertical coordination in the domestic vegetable and fruit market. Most previous researches have denied oligopolistic behaviors by large-scale production areas, or their negative economic effects both empirically and theoretically. On the other hand, researchers also evaluated the oligopsonic behaviors by large-scale buyers and vertical coordination in both positive and negative aspects. A unified evaluation methodology, however, has not been found yet. Secondly, whether the increasing of vertical transactions and decreasing of auction transactions will bring about incompleteness of market information is discussed. Theoretically if price-elastic buyers expand vertical transactions, the nature of the index of auction prices will be impaired. But domestic vegetable and fruit markets have not yet arrived at that situation.