Market Power Factors Analysis of Vegetable Supply Chain Actors: A Case Study in Tehran

Subject Areas : Agricultural Economics Research

mohammad reza nazari ¹ , milad aminizade ² , seyed ali darijani ³ , seyed mehdi mir ⁴

1 - Assistant Professor of Agricultural Economics, Shahid Beheshti University
2 - PhD student in Agricultural Economics, Ferdowsi University of Mashhad
3 - Department of Economic Engineering and Agricultural Production Management, Faculty of Agriculture, Payame Noor University
4 - PhD student in Agricultural Economics, University of Tehran

Received: 2019-09-25 Accepted : 2022-11-13 Published : 2023-02-20

Keywords: price, Tehran, market structure, marketing circles,

Abstract :

Vegetables are an important part of the food basket of Iranian households. The purpose of this study is to analyze the market power and identify the behavior of supply chain actors in selected vegetable products. For this purpose, the weekly data of selected vegetable products in Tehran in the period 1390-95 were analyzed. The experimental findings of the study include two main results. First, there is competition between the two levels of wholesale and retail, and the market power of wholesalers in the distribution chain of perishable products such as vegetables is greater than that of retailers. Second, the structure of the vegetable market is different and the reaction of supply chain actors to price changes in each loop is not the same in all products. Therefore, it is suggested that in leading policies, the market power of wholesalers in the vegetable distribution chain, as well as the differences in market structure and the role of each of the chain actors and the type of their reaction to changes in each product, should be considered.

References:

1. Mohammadipour R, Shahnoshi N, Durandish A, Abual-Hassani l. A comparative study of retail margin and efficiency of municipal and urban fruit and vegetable markets (Case study of Mashhad). Agricultural Economics and Development 2015 23 (89): 155-184.


2. Bain JS. Relation of profit rate to industry concentration: American manufacturing, 1936–1940. The Quarterly Journal of Economics. 1951 65(3): 293-324.


3. Baker JB, Bresnahan TF. Estimating the residual demand curve facing a single firm. International Journal of Industrial Organization. 1988 6(3): 283-300.


4. Bunte F. Pricing and performance in Agri-food supply chain. C.J.M. Ondersteijn, J.H.M. Wijnands, R.B.M. Huirne and O. van Kooten (eds.), Quantifying the agri-food supply chain. 2006: 37-45.


5. Busch G, Spiller A. Farmer share and fair distribution in food chains from a consumer’s perspective. Journal of Economic Psychology. 2016 55: 149-158.


6. Beatriz V, Bruno About farmers’ bargaining power within the new CAP. 2017 5(16): 1-13.


7. Çakır M, Nolan J. 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 2015 40(2): 203–219.


8. Carbone A. Food supply chains: coordination governance and other shaping forces. Agricultural and Food Economics 2017 5(1): 30-37.


9. Chen Y, Yu X. Does the centralized slaughtering policy create market power for pork industry in China? China Economic Review 2018. 50(c): 59-71.


10. Cowling K, Waterson M. Price-cost margins and market structure. Economica 1976 43(171): 267-274.


11. Deodhar SY, Pandey V. Degree of instant competition: estimation of market power in India's instant coffee market. IIMA Working Papers WP2006-10-02, Indian Institute of Management Ahmedabad, Research and Publication Department.


12. Epifani P, Gancia G. Trade, markup heterogeneity and misallocations.  Journal of International Economics. 2011  83(1): 1-13.‏


13. Feinberg RM. The Lerner index, concentration, and the measurement of market power. Southern Economic J. 1980 46: 1180–1186.


14. Felis A, Garrido A. Market power dynamics and price volatility in markets of fresh fruits and vegetables. Working Paper No 7, ULYSSES “Understanding and coping with food markets volatility towards more Stable World and EU food SystEmS. Available at: http://www.fp7-ulysses.eu/.


15. Goodhue RE. Food Quality: The design of incentive contracts. Annual Review of Resource Economics 2011 3(1): 119–140.


16. Hannan TH. Market share inequality, the number of competitors, and the HHI: an examination of bank pricing. Rev. Ind. Organ J 1997 12: 23–35.


17. Hatirli SA, Jones E, Aktas Measuring the market power of the banana import market in Turkey. Turk. J. Agric. For. 2004 27: 367–373.


18. Lerner AP. The concept of monopoly and the measurement of monopoly The Review of Economic Studies J. 1934 1:157-175.


19. McCorriston S. Why should imperfects competition matter to agricultural economists? European Review of Agricultural Economics 2002 29: 349–372.


20. Motta M. Competition policy. Theory and practice. Cambridge University Press. 2004.


21. Requena F. Price discrimination and market power in export markets: The case of the ceramic tile Journal of Applied Economics. 2005 8(2):347–370


22. Reardon T, Timmer P, Barrett B. Berdgué J. The rise of supermarkets in Africa, Asia, and Latin America. American Journal of Agricultural Economics.2003 85(5):1140–1146.


23. Rogers RT. Structural change in U.S. food manufacturing, 1958–1997. Agribusiness 2001 17(1): 3–32.


24. Saitone TL, Sexton RJ. Product differentiation and quality in food markets: Industrial organization implications. Annual Review of Resource Economics 2010 2(1): 341–368.


25. Sexton RJ. Market power, misconceptions, and modern agricultural markets. American Journal of Agricultural Economics. 2012 95 (2): 1-11.


26. Song B, Marchant MA, Xu S, Competitive analysis of Chinese soybean imports suppliers–U.S., Brazil, and Argentina. Annual meeting, July 23-26, Long Beach, CA from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). 2006.


27. Sorrentino A, Russo C, Cacchiarelli L. Market power and bargaining power in the EU food supply chain: the role of Producer New Medit. 2018 17(4):21-31.‏


28. Wan XY. An analysis of measuring market power in the international iron ore trade. Journal of Interdisciplinary Mathematics.2017 20(3): 749–759.


29. Yamaura K. Market power of the Japanese Non-GM soybean import market: The U.S. exporters vs. Japanese importers. Asian Journal of Agriculture and Rural Development. 2011 1(2): 80–89.


30. Yuriy P, Sergey SM, Pavel Determinants of price level differences in Russian regions, Post-Communist Economies . Taylor & Francis Journals. 2019 31(6): 772-789.


31. Zhu X, Li X, Zhang H, Huang J. International market power analysis of China’s tungsten export market--from the perspective of tungsten export policies. Resources Policy J. 2018 61(c): 643-652.


32. Zhu XH, Zhang HW, Li XY. Measurement of the international market power of China's rare Earth and the effectiveness of policy. Journal of International Trade. 2018 1: 32–44.