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Market Power and Structural Adjustment: The Case of West African Cocoa Market Liberalization

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  • Wilcox, Michael D.
  • Abbott, Philip C.

Abstract

Liberalization of the cocoa market in West Africa, due to structural adjustment reforms, has resulted in the elimination of para-statal marketing boards and initiated the creation of new institutions to replace the marketing services of those agencies. Concerns have been raised as to the effects of these reforms on prices of cocoa received by farmers, welfare measures and competitiveness of marketing channels. Of particular importance is backward integration of multinational processing firms, who take over exporting activities and may collect rents previously captured as export taxes. This paper uses a conjectural variations approach to estimate the degree of market power present in the post-liberalized cocoa bean markets of Ivory Coast and Nigeria. Evidence of market power is found in the Ivory Coast markets between the farmgate and U.S./EU15 imports. The market power, exercised by multinational exporter/processors, must be considered in concert with the Ivorian government who is still collecting export taxes. In contrast, no evidence of market power is found in the Nigerian markets or domestic (farmer to trader) markets of Ivory Coast.

Suggested Citation

  • 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).
    • Handle: RePEc:ags:aaea04:20084
    DOI: 10.22004/ag.econ.20084
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    Cited by:

    1. Verina Ingram & Fedes Van Rijn & Yuca Waarts & Henk Gilhuis, 2018. "The Impacts of Cocoa Sustainability Initiatives in West Africa," Sustainability, MDPI, vol. 10(11), pages 1-20, November.
    2. 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.
    3. Briones, Roehlano M., 2013. "The Structure of Agricultural Trade Industry in Developing Countries," Discussion Papers DP 2013-15, Philippine Institute for Development Studies.
    4. Janina Grabs & Sophia Louise Carodenuto, 2021. "Traders as sustainability governance actors in global food supply chains: A research agenda," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 1314-1332, February.
    5. Hoque, Mohammad Mainul & Schroeter, John R., 2010. "Agricultural trade liberalization and downstream market power: some extensions," ISU General Staff Papers 201003260700001109, Iowa State University, Department of Economics.
    6. Abbott, Philip C., 2007. "Distortions to Agricultural Incentives in Cote d’Ivoire," Agricultural Distortions Working Paper Series 48522, World Bank.
    7. Mofya-Mukuka, Rhoda & Abdulai, Awudu, 2013. "Policy reforms and asymmetric price transmission in the Zambian and Tanzanian coffee markets," Economic Modelling, Elsevier, vol. 35(C), pages 786-795.
    8. Mofya-Mukuka, Rhoda & Abdulai, Awudu, 2013. "Effects of Policy Reforms on Price Transmission in Coffee Markets: Evidence from Zambia and Tanzania," Food Security Collaborative Working Papers 171870, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    9. Joseph Stiglitz, 2018. "From manufacturing-led export growth to a twenty-first-century inclusive growth strategy: Explaining the demise of a successful growth model and what to do about it," WIDER Working Paper Series 176, World Institute for Development Economic Research (UNU-WIDER).
    10. Nataliia V. Stukalo* & Nataliya O. Krasnikova & Olena V. Dzyad & Olga G. Mihaylenko, 2019. "Sustainable International Trade in Agricultural Goods: Emerging Markets Perspectives," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 5(7), pages 1096-1105, 07-2019.
    11. Twine, Edgar E. & Adur-Okello, Stella E. & Mujawamariya, Gaudiose, 2023. "Estimating oligopsonistic market power in Uganda’s rice industry," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 62(3-4), December.
    12. Jan Fałkowski & Agata Malak-Rawlikowska & Dominika Milczarek-Andrzejewska, 2013. "Determinants and Consequences of Participating in a Restructured Supply Chain: the Experience of the Dairy Sector in Poland," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 34.
    13. Wilcox, Michael D. & Abbott, Philip C., 2006. "Can Cocoa Farmer Organizations Countervail Buyer Market Power?," 2006 Annual meeting, July 23-26, Long Beach, CA 21261, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Joseph E. Stiglitz, 2018. "From manufacturing-led export growth to a twenty-first-century inclusive growth strategy: Explaining the demise of a successful growth model and what to do about it," WIDER Working Paper Series wp-2018-176, World Institute for Development Economic Research (UNU-WIDER).
    15. Richard J. Sexton & Ian Sheldon & Steve McCorriston & Humei Wang, 2007. "Agricultural trade liberalization and economic development: the role of downstream market power," Agricultural Economics, International Association of Agricultural Economists, vol. 36(2), pages 253-270, March.
    16. Götz, Linde & von Cramon-Taubadel, Stephan & Kachel, Yael, 2014. "Vertical Price Transmission in the International Fresh Fruit and Vegetable Supply Chain: Israeli Grapefruit Exports to the EU after Export Liberalisation," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 53(2), pages 1-22, May.
    17. Subervie, Julie, 2011. "Producer price adjustment to commodity price shocks: An application of threshold cointegration," Economic Modelling, Elsevier, vol. 28(5), pages 2239-2246, September.
    18. repec:aer:wpaper:294 is not listed on IDEAS

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