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Market Power and the Volatility of Markups in the Food Value Chain: The Role of Italian Cooperatives

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  • Lee, Hyejin
  • Swinnen, Johan
  • Cayseele, Patrick Van

Abstract

Agricultural cooperatives have often been promoted as a way to increase their market power and to obtain stability of profit against uncertainty. This paper estimates the firm-level markups and markup volatility to identify the countervailing market power of cooperatives in the Italian fruits and vegetable sector and the dairy sector. We use the firm-level data of Italian firms for the period 2007-2014. We find that, overall, there is a tradeoff in cooperatives’ role between obtaining market power and stability. Farmer cooperatives in both sectors gain stability in their markups but their markups are lower, on average, than those for non-cooperatives. For processor cooperatives, the fruits and vegetable sector obtains more market power. This appears to arise from the product differentiation strategy of the processors cooperative.
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  • Lee, Hyejin & Swinnen, Johan & Cayseele, Patrick Van, 2021. "Market Power and the Volatility of Markups in the Food Value Chain: The Role of Italian Cooperatives," 2021 Conference, August 17-31, 2021, Virtual 315107, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae21:315107
    DOI: 10.22004/ag.econ.315107
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    More about this item

    Keywords

    Agribusiness; Marketing;

    JEL classification:

    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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