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Geographic diversification strategy and the implications of global market integration in table grapes

Author

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  • Angela M. Krueger

    (Department of Agricultural Economics, Texas A&M University,, TAMU 2124, College Station, Texas 77843-2124)

  • Victoria Salin

    (Department of Agricultural Economics, Texas A&M University,, TAMU 2124, College Station, Texas 77843-2124)

  • Allan W. Gray

    (Department of Agricultural Economics, Purdue University, 1145 Krannert, West Lafayette, Indiana 47907-1145)

Abstract

The geographic diversification mode for U.S. agribusinesses to establish an international presence is examined, using the example of table grapes. This study extends the analytical work on geographic diversification strategy in a firm-level application that considers how longer marketing seasons might affect early-season premium prices. The method draws on market integration tests from the industrial organization literature. The extent of market integration is examined using a probabilistic measure. Then, a simulation of profit incorporates the probability that markets are integrated. Tests on the market for table grapes indicate high probability that markets for domestic grapes and imports from Chile are not integrated (0.81 and 0.91). Long distances and the lack of overlap in production seasons play key roles in this finding. The simulation that makes operational the findings of limited integration suggests that geographic diversification is more profitable and of lower risk than production in California alone. [JEL Classification: Q130, Q170, F140] © 2002 Wiley Periodicals, Inc.

Suggested Citation

  • Angela M. Krueger & Victoria Salin & Allan W. Gray, 2001. "Geographic diversification strategy and the implications of global market integration in table grapes," Agribusiness, John Wiley & Sons, Ltd., vol. 18(1), pages 81-99.
    • Handle: RePEc:wly:agribz:v:18:y:2001:i:1:p:81-99
    DOI: 10.1002/agr.10004
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    References listed on IDEAS

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    Cited by:

    1. Larsen, Ryan A. & Vedenov, Dmitry V. & Leatham, David J., 2009. "Enterprise-level risk assessment of geographically diversified commercial farms: a copula approach," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46763, Southern Agricultural Economics Association.
    2. Robertson, Raymond, 2004. "Defining North American Economic Integration," North American Agrifood Integration: Situation and Perspectives, May 2004, Cancun, Mexico 16732, Farm Foundation.

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