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Traders’ market power along Indonesian rubber value chains

Thomas Kopp (Department of Agricultural Economics and Rural Development, University of Göttingen, Göttingen, Germany)
Bernhard Brümmer (Department of Agricultural Economics and Rural Development, University of Göttingen, Göttingen, Germany)

China Agricultural Economic Review

ISSN: 1756-137X

Article publication date: 2 May 2017

8780

Abstract

Purpose

While traders of agricultural products are known to often exercise market power, this power has rarely been quantified for developing countries. The paper aims to discuss this issue.

Design/methodology/approach

In order to derive a measure, the authors estimate the traders’ revenue functions and calculate the marginal value products directly from them. The authors subsequently find the determinants affecting their individual market power.

Findings

Results show that market power at the traders’ level exists and is substantial. This market power is amplified in situations of extreme remoteness, and weakens with increasing market size.

Originality/value

An exceptional data set with detailed information on the business practices of rubber traders in Jambi, Indonesia is employed with an innovative methodology to directly estimate revenue functions.

Keywords

Acknowledgements

The authors gratefully acknowledge the financial support of the German Research Foundation (DFG) within Collaborative Research Centre 990. The traders’ survey data were compiled within the CRC 990. Jenny Aker (Tufts University), Todd Benson (IFPRI, Kampala), and Ruth Vargas Hill (IFPRI, Washington) were so kind to provide the blank questionnaires which they used for their respective trader surveys.

Citation

Kopp, T. and Brümmer, B. (2017), "Traders’ market power along Indonesian rubber value chains", China Agricultural Economic Review, Vol. 9 No. 2, pp. 169-187. https://doi.org/10.1108/CAER-07-2015-0080

Publisher

:

Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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