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The process of vertical coordination and its consequences within the beer commodity chain

Author

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  • E. Veselská

    (Mendel University of Agriculture and Forestry, Brno, Czech Republic)

Abstract

The paper aims to identify the potential benefits from vertical coordination within the selected commodity chain. The problem is applied to the beer commodity chain because of its high importance in the Czech agribusiness and foreign trade. On the basis of the vertical analysis of the chosen commodity chain, a mathematic model of consumer price simulation is created and the existence of vertical coordination is verified in the analysed commodity chain. This model assumes that input price increases are transmitted to consumers. The retail prices of beer are simulated by holding technology and input-output relationships constant, while production as well as marketing costs change according to the changes in input prices. The simulated retail price is then compared with the actual retail price to indicate productivity gains resulting from vertical coordination passed on to consumers. The results of the Model of Retail Price Simulation show that Czech brewery industry was in the observed period (1994-2002) vertically coordinated.

Suggested Citation

  • E. Veselská, 2005. "The process of vertical coordination and its consequences within the beer commodity chain," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 51(9), pages 419-426.
    • Handle: RePEc:caa:jnlage:v:51:y:2005:i:9:id:5129-agricecon
    DOI: 10.17221/5129-AGRICECON
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    References listed on IDEAS

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    1. Martinez, Steve W. & Reed, Al, 1996. "From Farmers to Consumers: Vertical Coordination in the Food Industry," Agricultural Information Bulletins 309735, United States Department of Agriculture, Economic Research Service.
    2. Mighell, Ronald L. & Jones, Lawrence A., 1963. "Vertical Coordination in Agriculture," Agricultural Economic Reports 307164, United States Department of Agriculture, Economic Research Service.
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