IDEAS home Printed from https://ideas.repec.org/p/isu/genres/31390.html
   My bibliography  Save this paper

Agricultural Trade Liberalization and Downstream Market Power: Some Extensions

Author

Listed:
  • Hoque, Mainul Mohammad
  • Schroeter, John R.

Abstract

Exports of agricultural commodities to developed countries play a significant role in the economies of many developing countries. The elimination of import tariffs has the potential to benefit producers in the developing countries, but estimates of the effect of trade liberalization typically assume perfect competition. Significant concentration in the food processing and retailing sectors of the U.S. and the EU undermine the plausibility of this assumption in the case of agricultural trade, however. Sexton, Sheldon, McCorriston, and Wang (SSMW, 2007) developed a model of the effects of trade liberalization that accounts for the vertically-linked and concentrated characteristics of the developed countries’ food markets. Their principal qualitative finding is that an analysis based on the assumption of competitive conduct will overstate the effects of trade liberalization if food processing and retailing firms exercise market power. This result is sensitive to their choice of functional forms, however, as this paper demonstrates with an analysis in which SSMW’s linearity assumption is replaced by constant elasticity specifications for supply and demand. We also extend the SSMW analysis by considering ad valorem tariffs, a case for which the results exhibit both qualitative and quantitative differences from those for the unit tariff case.

Suggested Citation

  • Hoque, Mainul Mohammad & Schroeter, John R., 2010. "Agricultural Trade Liberalization and Downstream Market Power: Some Extensions," Staff General Research Papers Archive 31390, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:31390
    as

    Download full text from publisher

    File URL: http://www2.econ.iastate.edu/papers/p11390-2010-03-26.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rodrik, Dani & McMillan, Margaret & Horn Welch, Karen, 2002. "When Economic Reform Goes Wrong: Cashews in Mozambique," CEPR Discussion Papers 3519, C.E.P.R. Discussion Papers.
    2. 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.
    3. 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).
    4. Byeong‐Il Ahn & Hyunok Lee, 2010. "An equilibrium displacement approach to oligopoly market analysis: an application to trade in the Korean infant formula market," Agricultural Economics, International Association of Agricultural Economists, vol. 41(2), pages 101-109, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. 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.
    3. Roehlano M. Briones, 2013. "The Structure of Agricultural Trade Industry in Developing Countries," Trade Working Papers 23420, East Asian Bureau of Economic Research.
    4. Çakır, Metin & Nolan, James, 2015. "Revisiting Concentration in Food and Agricultural Supply Chains: The Welfare Implications of Market Power in a Complementary Input Sector," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(2), pages 1-17, May.
    5. Ronchi, Loraine, 2006. "Fairtrade and market failures in agricultural commodity markets," Policy Research Working Paper Series 4011, The World Bank.
    6. Antonio Cruz & Carol Newman & John Rand & Finn Tarp, 2017. "Learning by Exporting: The Case of Mozambican Manufacturing," Journal of African Economies, Centre for the Study of African Economies, vol. 26(1), pages 93-118.
    7. Balat, Jorge & Brambilla, Irene & Porto, Guido, 2009. "Realizing the gains from trade: Export crops, marketing costs, and poverty," Journal of International Economics, Elsevier, vol. 78(1), pages 21-31, June.
    8. Depetris Chauvin, Nicolas & Porto, Guido G., 2011. "Market Competition in Export Cash Crops and Farm Income," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126159, International Association of Agricultural Economists.
    9. Sexton, Richard J. & Sheldon, Ian M. & McCorriston, Steve & Wang, Humei, 2004. "Analyzing Vertical Market Structure And Its Implications For Trade Liberalization," 2004 Annual meeting, August 1-4, Denver, CO 20060, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Saitone Tina L & Sexton Richard J., 2009. "A Flexible Oligopoly-Oligopsony Model for Classroom Simulations and Policy Analyses," Journal of Industrial Organization Education, De Gruyter, vol. 4(1), pages 1-16, March.
    11. Julie A. Silva, 2013. "Rural Income Inequality in Mozambique: National Dynamics and Local Experiences?," The Review of Regional Studies, Southern Regional Science Association, vol. 43(1), pages 23-50, Summer.
    12. Rose, Andrew K., 2004. "Do WTO members have more liberal trade policy?," Journal of International Economics, Elsevier, vol. 63(2), pages 209-235, July.
    13. Sam Laird & David Vanzetti & Santiago Fernández de Córdoba, 2005. "Smoke And Mirrors: Making Sense Of The Wto Industrial Tariff Negotiations," UNCTAD Blue Series Papers 30, United Nations Conference on Trade and Development.
    14. Narayan, Seema & Bhattacharya, Poulomi, 2019. "Relative export competitiveness of agricultural commodities and its determinants: Some evidence from India," World Development, Elsevier, vol. 117(C), pages 29-47.
    15. Johannes Schwarzer, 2016. "Trade and Employment. An Overview," Discussion Notes 1601, Council on Economic Policies.
    16. Abbott, Philip C., 2007. "Distortions to Agricultural Incentives in Cote d’Ivoire," Agricultural Distortions Working Paper Series 48522, World Bank.
    17. Byeong‐Il Ahn & Hyunok Lee, 2010. "An equilibrium displacement approach to oligopoly market analysis: an application to trade in the Korean infant formula market," Agricultural Economics, International Association of Agricultural Economists, vol. 41(2), pages 101-109, March.
    18. Montalbano, P. & Pietrelli, R. & Salvatici, L., 2018. "Participation in the market chain and food security: The case of the Ugandan maize farmers," Food Policy, Elsevier, vol. 76(C), pages 81-98.
    19. Wittern, Jonas & Luckmann, Jonas & Grethe, Harald, 2023. "Cashew processing in Ghana – A case for infant industry support?," Food Policy, Elsevier, vol. 119(C).
    20. Thomas Kopp & Richard J. Sexton, 2021. "Farmers, Traders, and Processors: Buyer Market Power and Double Marginalization in Indonesia," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 543-568, March.

    More about this item

    Keywords

    oligopoly; oligopsony; trade liberalization; vertical market structure;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isu:genres:31390. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Curtis Balmer (email available below). General contact details of provider: https://edirc.repec.org/data/deiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.