IDEAS home Printed from https://ideas.repec.org/a/oup/erevae/v26y1999i2p219-27.html
   My bibliography  Save this article

Product Heterogeneity and the Relationship between Retail and Farm Prices

Author

Listed:
  • Wohlgenant, Michael K

Abstract

This paper examines the relationship between the price of an aggregate of agricultural outputs and raw material price in two situations: (i) when product heterogeneity within the product group arises from aggregation over heterogeneous commodities of different competitive industries, and (ii) when product heterogeneity arises from product differentiation among similar products in a monopolistically competitive industry. We show that a positive relationship between the aggregate price spread and the agricultural raw material price could result from input substitution between the raw material input and other inputs in response to changes in the relative raw material price. Indeed, within a composite product group there is likely to be significant input substitution, in response to changes in relative input prices, because of the increased opportunities for efficiency gains from altering the composition of the heterogenous commodities within the composite product. Therefore, when analysing aggregate price spread behaviour of agricultural commodities using data on composite product, one should be cautious in attributing observed markup pricing behaviour to market power resulting from imperfect competition. Copyright 1999 by Oxford University Press.

Suggested Citation

  • Wohlgenant, Michael K, 1999. "Product Heterogeneity and the Relationship between Retail and Farm Prices," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 26(2), pages 219-227, June.
  • Handle: RePEc:oup:erevae:v:26:y:1999:i:2:p:219-27
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michael K. Wohlgenant & Nicholas E. Piggott, 2003. "Distribution of gains from research and promotion in the presence of market power," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 301-314.
    2. World Bank, 2009. "Land Reform, Rural Development, and Poverty in the Philippines : Revisiting the Agenda," World Bank Publications - Reports 18545, The World Bank Group.
    3. Rahman, Mohammad Chhiddikur, 2020. "Welfare Impact of Asymmetric Price Transmission on Bangladesh Rice Consumers," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 242248, September.
    4. Reed, Albert J. & Elitzak, Howard & Wohlgenant, Michael K., 2002. "Retail-Farm Price Margins And Consumer Product Diversity," Technical Bulletins 33573, United States Department of Agriculture, Economic Research Service.
    5. Olipra, Jakub, 2020. "Price transmission in (de)regulated agricultural markets," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 59(4), October.
    6. Isaac Abunyuwah & Henry De-Graft Acquah, 2013. "Modelling non-linear Spatial Market Integration and Equilibrium Processes in Hidden Markov Framework," Journal of Economics and Behavioral Studies, AMH International, vol. 5(8), pages 535-545.
    7. Ozcan Ozturk, 2018. "Effects of Price Transmission and Exchange Rate Elasticities of Three Developing Countries on the World Cotton Trade," Applied Economics and Finance, Redfame publishing, vol. 5(1), pages 91-101, January.
    8. Abunyuwah, Isaac, 2013. "Implications of conceptual and data complexities on time-series econometric applications in market integration analysis," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 115(1), pages 1-7, February.
    9. Christensen, Lee A., 2002. "Soil, Nutrient, And Water Management Systems Used In U.S. Corn Production," Agricultural Information Bulletins 33618, United States Department of Agriculture, Economic Research Service.
    10. Dipankar Das, 2019. "Multilayer of Suppliers Fixed Costs and Spatial Competition in the Upstream Market as a Source of Retailers Buying Power," Studies in Microeconomics, , vol. 7(2), pages 210-226, December.
    11. Cranfield, John A.L., 2002. "Optimal Advertising With Traded Raw And Final Goods: The Case Of Variable Proportions Technology," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(1), pages 1-18, July.
    12. Franz Sinabell, 2005. "Marktspannen und Erzeugeranteil an den Ausgaben für Nahrungsmittel," WIFO Studies, WIFO, number 25398.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:erevae:v:26:y:1999:i:2:p:219-27. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/eaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.