IDEAS home Printed from https://ideas.repec.org/a/rnd/arjsds/v2y2011i3p94-103.html
   My bibliography  Save this article

Measuring the Degree of Market Power in the Export Demand for Nigerian Cocoa: An Analysis of Dutch Market

Author

Listed:
  • Nwachukwu Nwachukwu
  • J. C. Nwaru
  • C. Paveliuc–Olariu

Abstract

The study examined the degree of market power in the export demand for Nigerian Cocoa with focus on the Dutch Market. The study covered the periods of 1961–2007 and data comprised published national aggregates on specific trade and macroeconomic variables from reputable sources. Two Stage Least Squares (2 SLS) approach was used in the estimation after instrumenting for simultaneity and establishing stationarity alongside cointegration relationship. Findings, on the demand side, showed that the demand for cocoa increases as income of Netherlands (importing country) increases. Total production of the non– participating countries traced out a positive relationship with demand for cocoa by the importing country while the coefficient of price of Coffee (substitute crop) possessed a negative sign. On the supply relation side, the demand for the export crop has a negative sign, indicating decreasing marginal output with respect to cost while the proxy for ocean freight rate with its negative sign, imply increasing export cost. The result further showed that there is relative competitiveness in the Dutch market on the strength of a market power coefficient -0.712 with a Lerner index of 0.122. Based on the findings, the study calls for government intervention in the agricultural export subsector with the aim to revitalize the country’s agricultural export capacity and enhance her market power via increased market shares. These interventions could be in the form of input/production subsidies, targeted export promotion programs, farm settlement, expanded export processing zones to mention but a few.

Suggested Citation

  • Nwachukwu Nwachukwu & J. C. Nwaru & C. Paveliuc–Olariu, 2011. "Measuring the Degree of Market Power in the Export Demand for Nigerian Cocoa: An Analysis of Dutch Market," Journal of Social and Development Sciences, AMH International, vol. 2(3), pages 94-103.
    • Handle: RePEc:rnd:arjsds:v:2:y:2011:i:3:p:94-103
    DOI: 10.22610/jsds.v2i3.658
    as

    Download full text from publisher

    File URL: https://ojs.amhinternational.com/index.php/jsds/article/view/658/658
    Download Restriction: no
    File URL: https://ojs.amhinternational.com/index.php/jsds/article/view/658
    Download Restriction: no
    File URL: https://libkey.io/10.22610/jsds.v2i3.658?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. David E. Buschena & Jeffrey M. Perloff, 1991. "The Creation of Dominant Firm Market Power in the Coconut Oil Export Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1000-1008.
    2. Richard J. Sexton, 2000. "Industrialization and Consolidation in the U.S. Food Sector: Implications for Competition and Welfare," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(5), pages 1087-1104.
    3. Wilcox, Michael D. & Abbott, Philip C., 2004. "Market Power and Structural Adjustment: The Case of West African Cocoa Market Liberalization," 2004 Annual meeting, August 1-4, Denver, CO 20084, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057, Elsevier.
    5. Deodhar, Satish Y. & Sheldon, Ian M., 1997. "Market Power In The World Market For Soymeal Exports," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(01), pages 1-9, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Perekhozhuk, Oleksandr, 2007. "Marktstruktur und Preisbildung auf dem ukrainischen Markt für Rohmilch," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 41, number 92322.
    2. Reimer, Jeffrey J. & Stiegert, Kyle W., 2006. "Evidence on Imperfect Competition and Strategic Trade Theory," Staff Paper Series 498, University of Wisconsin, Agricultural and Applied Economics.
    3. Perekhozhuk, Oleksandr, 2013. "Moderne Konzepte zur Analyse der Preisbildung auf dem Faktormarkt mit unvollständigem Wettbewerb," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 4, pages 99-106.
    4. Oleksandr Perekhozhuk, 2013. "Modern Concepts for Pricing Analysis in Imperfect Competition Production Factor Market," Oblik i finansi, Institute of Accounting and Finance, issue 4, pages 99-106, December.
    5. Jeffrey Perloff & Edward Shen, 2012. "Collinearity in Linear Structural Models of Market Power," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(2), pages 131-138, March.
    6. Chang, Shun-Chiao & Chang, Jui-Chuan Della & Huang, Tai-Hsin, 2012. "Assessing market power in the U.S. commercial banking industry under deregulation," Economic Modelling, Elsevier, vol. 29(5), pages 1558-1565.
    7. Ian Sheldon & Richard Sperling, 2003. "Estimating the Extent of Imperfect Competition in the Food Industry: What Have We Learned?," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 89-109, March.
    8. Lukáš Čechura & Tinoush Jamali Jaghdani, 2021. "Market Imperfections within the European Wheat Value Chain: The Case of France and the United Kingdom," Agriculture, MDPI, vol. 11(9), pages 1-21, August.
    9. Grau, Aaron Stephan Alexander & Hockmann, Heinrich, 2017. "Estimating oligopsony power on two vertically integrated markets," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261277, European Association of Agricultural Economists.
    10. Villas-Boas, Sofia Berto, 2007. "Using Retail Scanner Data for Upstream Merger Analysis: Counterfactual Experiments in the Retail Coffee Market," CUDARE Working Papers 7163, University of California, Berkeley, Department of Agricultural and Resource Economics.
    11. Nguyen-Ones, Mai & Steen, Frode, 2018. "Measuring Market Power in Gasoline Retailing: A Market- or Station Phenomenon?," Discussion Paper Series in Economics 6/2018, Norwegian School of Economics, Department of Economics.
    12. Roehlano M. Briones, 2013. "The Structure of Agricultural Trade Industry in Developing Countries," Trade Working Papers 23420, East Asian Bureau of Economic Research.
    13. Dimitrios Panagiotou & Athanassios Stavrakoudis, 2017. "A Stochastic Production Frontier Estimator of the Degree of Oligopsony Power in the U.S. Cattle Industry," Journal of Industry, Competition and Trade, Springer, vol. 17(1), pages 121-133, March.
    14. Dries Maes & Mark Vancauteren & Steven Passel, 2019. "Investigating market power in the Belgian pork production chain," Review of Agricultural, Food and Environmental Studies, Springer, vol. 100(1), pages 93-117, December.
    15. Dries Maes & Mark Vancauteren & Steven Van Passel, 2019. "Investigating market power in the Belgian porkproduction chain," Review of Agricultural, Food and Environmental Studies, INRA Department of Economics, vol. 100(1-4), pages 93-117.
    16. Sofia Berto Villas-Boas, 2007. "Using Retail Data For Upstream Merger Analysis," Journal of Competition Law and Economics, Oxford University Press, vol. 3(4), pages 689-715.
    17. Kamerschen, David R. & Klein, Peter G. & Porter, David V., 2005. "Market structure in the US electricity industry: A long-term perspective," Energy Economics, Elsevier, vol. 27(5), pages 731-751, September.
    18. Nguyen-Ones , Mai & Steen, Frode, 2018. "Market Power in Retail Gasoline Markets," Discussion Paper Series in Economics 21/2019, Norwegian School of Economics, Department of Economics, revised 01 Jul 2019.
    19. Whitley John, 2002. "The Gains and Losses from Agricultural Concentration: A Critical Survey of the Literature," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 1(1), pages 1-20, October.
    20. Deodhar, Satish Y. & Fletcher, Stanley M., 1998. "Degree Of Competition In The U.S. Peanut Butter Industry: A Dynamic Error Correction Approach," Faculty Series 16725, University of Georgia, Department of Agricultural and Applied Economics.

    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:rnd:arjsds:v:2:y:2011:i:3:p:94-103. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Muhammad Tayyab (email available below). General contact details of provider: https://ojs.amhinternational.com/index.php/jsds .

    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.