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Cartel Pricing with Entry: the Experience of the Far West Marketing Order for Spearmint

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  • Balagtas, Joseph Valdes
  • Masters, William J.
  • Zimmer, Timothy

Abstract

This paper documents the remarkable experience of the Far West mint producers in the operation of their marketing order. From 1993 to 2002, the marketing order witnessed a dramatic reduction its share of the Scotch spearmint market, as well as a reduction in both its price. We apply a model of a cartel facing a competitive fringe to describe the fall in the marketing order price as a logical consequence of increased world production of spearmint oil. We estimate an econometric model of the marketing order price and find that a 1-percent change in the marketing order's market share corresponds to a 0.8 percent change in the marketing order price.

Suggested Citation

  • Balagtas, Joseph Valdes & Masters, William J. & Zimmer, Timothy, 2005. "Cartel Pricing with Entry: the Experience of the Far West Marketing Order for Spearmint," 2005 Annual meeting, July 24-27, Providence, RI 19328, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea05:19328
    DOI: 10.22004/ag.econ.19328
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    References listed on IDEAS

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    3. John M. Crespi & Adriana Chacón-Cascante, 2004. "Do U.S. marketing orders have much market power? An examination of the Almond Board of California," Agribusiness, John Wiley & Sons, Ltd., vol. 20(1), pages 1-15.
    4. Filson, Darren & Keen, Edward & Fruits, Eric & Borcherding, Thomas, 2001. "Market Power and Cartel Formation: Theory and an Empirical Test," Journal of Law and Economics, University of Chicago Press, vol. 44(2), pages 465-480, October.
    5. repec:cdl:agrebk:623332 is not listed on IDEAS
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