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Competition in the Swedish Coffee Market

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  • Durevall, Dick

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

It is a widespread belief that multinationals are exploiting their market power in national coffee markets by keeping consumer prices too high and thereby limiting demand for coffee beans. The purpose of this study is to test if this is case in the Swedish market for roasted coffee. In the Swedish market there are a few very large roasting companies and many small ones; a market structure that is typical of many consumer markets for coffee. To analyze the degree of market power, an oligopoly model is estimated using market time series data. The econometric approach is to first test for long-run relationships between the variables with cointegration analysis, and then to estimate a system of equations for demand and pricing behavior. Our major finding is that there is no evidence of market power in the long run, and only some in the short run.

Suggested Citation

  • Durevall, Dick, 2004. "Competition in the Swedish Coffee Market," Working Papers in Economics 134, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0134
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    File URL: http://hdl.handle.net/2077/2781
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    References listed on IDEAS

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    6. Koerner, Julia, 2002. "The dark side of coffee. Price war in the German market for roasted coffee," FE Working Papers 0204, Christian-Albrechts-University of Kiel, Department of Food Economics and Consumption Studies.
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    Cited by:

    1. Durevall, Dick, 2005. "Demand for Coffee: The Role of Prices, Preferences and Market Power," Working Papers in Economics 162, University of Gothenburg, Department of Economics.
    2. Carlos Noton & Andrés Elberg, 2013. "Revealing Bargaining Power through Actual Wholesale Prices," Documentos de Trabajo 304, Centro de Economía Aplicada, Universidad de Chile.

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    More about this item

    Keywords

    Coffee market; Market power; Multinationals; Oligopoly; Sweden;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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