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The Welfare Implications of Oligopoly in Agricultural Input Markets

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  • McCorriston, Steve

Abstract

The persistence of oligopoly in the agricultural input supply sector suggests that farmers' economic welfare is reduced since the price of agricultural inputs will be in excess of marginal cost. This paper focuses on the U.K. fertilizer and tractor industries and measures the welfare impact on U.K. farmers if oligopoly in these two industries could be removed. Using a computable partial equilibrium model, it is shown that depending on the definition of welfare loss, farmers' producer surplus could increase by as much as 30 percent with most of this being due to eradicating oligopoly in the fertilizer industry. These results suggest that the social costs of market power in these industries could be higher than those found for manufacturing industries in general. Copyright 1993 by Oxford University Press.

Suggested Citation

  • McCorriston, Steve, 1993. "The Welfare Implications of Oligopoly in Agricultural Input Markets," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 20(1), pages 1-17.
    • Handle: RePEc:oup:erevae:v:20:y:1993:i:1:p:1-17
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    Cited by:

    1. Salhofer, Klaus & Schneider, Friedrich & Streicher, Gerhard, 1999. "Least Cost Efficiency Of Agricultural Programs: An Empirical Investigation," 1999 Annual meeting, August 8-11, Nashville, TN 21565, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Ronchi, Loraine, 2006. "Fairtrade and market failures in agricultural commodity markets," Policy Research Working Paper Series 4011, The World Bank.
    3. Oskam, Arie J. & Meester, Gerrit, 2006. "How useful is the PSE in determining agricultural support?," Food Policy, Elsevier, vol. 31(2), pages 123-141, April.
    4. A L Tiffin & P J Dawson, 1997. "Measuring Oligopolistic Distortion In The Uk Frozen Potato Product Sector: A Calibration Modelling Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1‐3), pages 300-312, January.
    5. Friedrich Schneider & Klaus Salhofer & Erwin Schmid & Gerhard Streicher, 2001. "Was the Austrian agricultural policy least cost efficient?," Economics working papers 2001-03, Department of Economics, Johannes Kepler University Linz, Austria.
    6. C. R. Dryburgh & C. J. Doyle, 1995. "Distribution Of Research Gains Under Different Market Structures: The Impact Of Technological Change Within The Uk Dairy Industry," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(1), pages 80-96, January.
    7. Nolan, Elizabeth & Santos, Paulo, 2009. "Evidence for increasing concentration in plant breeding industries in the United States and the European Union," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 48060, Australian Agricultural and Resource Economics Society.

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