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Article
Publication date: 20 August 2018

Ling Ma, Alexander Nuetah and Xiuqing Wang

The purpose of this paper is to investigate the role of market power and returns to scale in the determination of farm-value share.

Abstract

Purpose

The purpose of this paper is to investigate the role of market power and returns to scale in the determination of farm-value share.

Design/methodology/approach

This paper utilizes the equilibrium displacement model to investigate the role of market power and returns to scale in the determination of farm-value share. Contrary to the current literature, the paper incorporates oligopoly power, oligopsony power and non-constant return to scale into one generalized model, which systematically enables us investigate the impacts of market power on the determination and changes of farm-value share.

Findings

The results imply that market power as well as non-constant returns to scale is central to the understanding of farm-value share. These, in turn, indicate that ignoring the impacts of market power and degree of return to scale may overestimate or underestimate the impacts of exogenous shocks on changes in farm-value share.

Originality/value

Thus, to the best of the authors’ knowledge, no literature has examined the co-existence of oligopsony power, oligopoly power as well as non-constant return to scale in farm-value share determination. This paper therefore tries to fill this gap.

Details

China Agricultural Economic Review, vol. 11 no. 1
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 8 May 2018

Jiawu Dai, Xun Li and Hailong Cai

The purpose of this paper is to measure and examine the relationships between market power, scale economy and productivity for several important food and tobacco industries in…

Abstract

Purpose

The purpose of this paper is to measure and examine the relationships between market power, scale economy and productivity for several important food and tobacco industries in China.

Design/methodology/approach

The model applied in this paper is based on Hall’s framework (Hall, 1988, 1990) and Klette (1999). The paper relaxes the assumption of constant returns to scale, and estimates market power and rate of returns to scale simultaneously, and then employs a covariance approach to examine the relationship between market power, scale economy and productivity via an unbalanced panel data at firm level.

Findings

Empirical results indicate that all the selected seven food industries are characterized with significant market power, especially for China’s cigarette industry whose markup is as almost five times as the smallest one. In addition, China’s soybean and cigarette sectors are manifested to have scale economy, with return to scale being larger than 1, while the other five sectors are proved to have decreasing returns to scale. Empirical results also provide evidence to support significant negative correlations between market power and scale economy in all sectors, and negative correlations between market power and productivity in most of the selected sectors. While more heterogeneous relationship between scale economy and productivity are found across the selected sectors.

Originality/value

This paper contributes to examine the relationship between market power, scale economy and productivity empirically for Chinese food manufacturers using a firm-level unbalanced panel data. Results which coincide well with the reality provide policy implication on understanding the situation of market structure for China’s food and tobacco industry.

Details

China Agricultural Economic Review, vol. 10 no. 2
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 14 November 2019

Jiawu Dai and Xun Li

The purpose of this paper is to estimate oligopsony power in the upstream factor market and oligopoly power in the downstream product market. On this basis, the paper intends to…

Abstract

Purpose

The purpose of this paper is to estimate oligopsony power in the upstream factor market and oligopoly power in the downstream product market. On this basis, the paper intends to examine the effects of both oligopsony and oligopoly power as well as ownership on technical efficiency which were rarely discussed in previous studies.

Design/methodology/approach

First, based on the stochastic frontier production function, the paper constructs a new model that is capable to estimate oligopsony power for each observation. Second, the paper employs the popular dual stochastic frontier cost function to estimate marginal cost as well as oligopoly power. Then, the system GMM method with different sets of instrumental variables is applied to test the effects of the two-sided market power and ownership on technical efficiency.

Findings

Using unbalanced panel data at the firm level, the paper demonstrates that oligopsony power is significantly variant across different sectors. The most notable point is that oligopsony power in China’s soya and peanut oil industries is negative, while that in pork and beef industries is much stronger than those in other industries. In addition, state-owned enterprises (SOEs) are found to be less technically efficient in most of the selected industries, while SOEs with higher oligopsony power tend to be more technically efficient than non-state-owned enterprises(NSOEs), which is consistent with the quiet life hypothesis.

Originality/value

This paper sheds light mainly on three aspects. First, it proposes a new model to estimate oligopsony power for each single firm. Second, it tests the effect of oligopsony power on technical efficiency. Third, it distinguishes the differential effect of oligopsony power on technical efficiency between SOEs and NSOEs.

Details

China Agricultural Economic Review, vol. 12 no. 2
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 15 August 2019

Hao Lan and Xiaojin Wang

The purpose of this paper is to investigate market power in the Chinese pork supply chain. The authors aim to explain why a steady rise in prices is observed in the sector, apart…

Abstract

Purpose

The purpose of this paper is to investigate market power in the Chinese pork supply chain. The authors aim to explain why a steady rise in prices is observed in the sector, apart from existing evidence on incomplete/asymmetric cost pass-through and concerns of growing concentration and consolidation in the sector.

Design/methodology/approach

This study uses a new empirical industrial organization model for both oligopoly and oligopsony power to measure the degree of market power exerted on consumers and hog farmers simultaneously.

Findings

By examining annual panel data across provinces in China, the authors find that both oligopoly and oligopsony powers exist in the pork supply chain. In particular, the authors determine that a higher degree of market power is found to influence prices paid to hog farmers than prices paid by pork consumers. Estimates of key elasticities in the Chinese pork supply chain are also updated based on the structural model estimation and the latest data.

Research limitations/implications

Due to the lack of data at a more granular level of geography, the authors are only able to estimate market power by three major economic regions.

Practical implications

The findings provide useful information for future policy analyses of Chinese food markets. First, the pork-packing industry should be of great concern in terms of market power and its influence on consumers’ and farmers’ welfare. It is essential to take into consideration market power in the pork supply chain before making any public policy regarding the pork market. Furthermore, following economic theory and experience from developed countries, large meat packers will eventually vertically control hog farmers given their stronger oligopsony power over the upstream. Vertical integration may be the next important issue in terms of food market competition. Finally, the results may also draw the government’s attention to investigating market competition in all major food markets.

Originality/value

The empirical evidence draws attention to the issue of food market competition in one of the largest and most important meat-packing markets in China. The authors hope to encourage further discussions on pork and hog market regulations and related public policies.

Details

China Agricultural Economic Review, vol. 12 no. 1
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 27 April 2020

Jiawu Dai, Xiuqing Wang and Guang Yuan

The effect of market power on allocative efficiency is one of the most important topics in industrial organization and has undergone rigorous investigation since the 1970s…

Abstract

Purpose

The effect of market power on allocative efficiency is one of the most important topics in industrial organization and has undergone rigorous investigation since the 1970s. However, empirical studies based on firm-level data are relatively rare, especially with regard to China's tobacco and food industries. Accordingly, this research measures market power and allocative efficiency loss (AEL) of the main tobacco and food industries in China with micro data at firm level. Subsequently, it conducts a comparative analysis on them.

Design/methodology/approach

This research applies the New Empirical Industrial Organization (NEIO) model, consisting of five pricing and demand simultaneous equations to measure market power, and the AEL model to measure AEL induced by market power. To match with the micro data at firm level, the study implements a change in the traditional NEIO model by abandoning the aggregating process.

Findings

Empirical results show that China's tobacco industry, among five sectors selected, has the largest market power and thus the highest degree of AEL, whereas other sectors have apparently smaller market power and lower levels of AEL. Comparative analysis demonstrates a coarse positive correlation between market power and AEL in the selected industries. In general, the results accord well with the existing empirical findings and the reality.

Research limitations/implications

This study has some deficiencies. First, owing to the limitation of high-quality data, the sectors analyzed in this research are insufficient to sum up all the characteristics and rules of China's whole food industry. Second, this research only analyzes seller market power and leaves out buyer market power, which could be a direction for future research.

Practical implications

The relevant administrations should strictly limit the monopoly behaviors of enterprises and establish a favorable and competitive market environment, especially for the tobacco industry. This suggestion is precisely an important content of China's Supply-side Reform.

Originality/value

The research improves the NEIO model in that it can be estimated with micro data at firm level. To the best knowledge of the authors, very few empirical and comparative analyses exist on market power and AEL for China's tobacco and food manufacturers using micro data.

Details

Journal of Agribusiness in Developing and Emerging Economies, vol. 10 no. 3
Type: Research Article
ISSN: 2044-0839

Keywords

Book part
Publication date: 4 April 2016

Louis P. Cain and Brooks A. Kaiser

At the beginning of the 20th century, three intertwined ambitions drove federal legislation over wildlife and biodiversity: establishment of multiple-use federal lands, the…

Abstract

At the beginning of the 20th century, three intertwined ambitions drove federal legislation over wildlife and biodiversity: establishment of multiple-use federal lands, the economic development of natural resources, and the maintenance of option values. We examine this federal intervention in natural resource use by analyzing roll call votes over the past century with a Random Utility Model (Manski, 1977) and conclude that economics mattered. So did ideology, but not uniformly. After World War II, the pro-environment vote which had been conservative shifted to being liberal. All these votes involved decisions regarding public land that reallocated the returns to users by changing the asset’s physical character or its usage rights. We suggest that long-term consequences affecting current resource allocations arose from disparities between broadly dispersed benefits and locally concentrated socioeconomic and geophysical (spatial) costs. We show that a primary intent of public land management has become to preserve multiple-use option values and identify important factors in computing those option values. We do this by demonstrating how the willingness to forego current benefits for future ones depends on the community’s resource endowments. These endowments are defined not only in terms of users’ current wealth accumulation but also from their expected ability to extract utility from natural resources over time.

Article
Publication date: 2 October 2007

Laurie Bonney, Rob Clark, Ray Collins and Andrew Fearne

The purpose of this article is to demonstrate the importance of a strategic approach to collaborative innovation and the use of a value chain research methodology for identifying…

7675

Abstract

Purpose

The purpose of this article is to demonstrate the importance of a strategic approach to collaborative innovation and the use of a value chain research methodology for identifying opportunities for co‐innovation.

Design/methodology/approach

Value chain analysis is used to map three flows in the Houston Farms value chain; material flow, information flow and relationships. Having diagnosed the current level of co‐innovation we then identify improvement projects and opportunities for co‐innovation to reduce cost and add value, for the benefit of the value chain as a whole.

Findings

The application of the value chain analysis methodology to the Houston Farms value chain revealed the importance of strategy and robust processes in key areas for co‐innovation – R&D and new product development. It also revealed that small businesses can enjoy a degree of success as a result of comparative advantage in certain areas but that sustainable competitive advantage cannot occur by chance – identifying the potential for co‐innovation is an important first step in the right direction.

Research limitations/implications

The value chain innovation roadmap represents a useful framework for exploring the current state and future capability for co‐innovation in a value chain. The value chain analysis methodology is an effective diagnostic tool as it focuses on what happens at the interface between stakeholders and how this relates to what final consumers regard as value adding, rather than traditional financial and functional KPIs which make it difficult to explore the competitiveness of the value chain as a whole.

Originality/value

The explicit and objective measurement of what consumers value is an important addition to the value chain analysis methodology and the co‐innovation roadmap is an original attempt to illustrate the core drivers and capabilities for achieving co‐innovation in a value chain. The insights from the case demonstrate the value of this approach to companies who are open to innovation and recognise the need to focus the use of scarce value‐adding resources on specific value chains and the needs and wants of final consumers therein.

Details

Supply Chain Management: An International Journal, vol. 12 no. 6
Type: Research Article
ISSN: 1359-8546

Keywords

Article
Publication date: 3 January 2020

Yeong Sheng Tey, Abdulla Ibragimov, Mark Brindal, Shaufique F. Sidique, Rustam Abduraupov and Miraziz Makhmudov

Paddy farmers form the backbone of food security. However, poverty plagues them despite having linked them to the rice value chain. To overcome this, the concept of involving…

Abstract

Purpose

Paddy farmers form the backbone of food security. However, poverty plagues them despite having linked them to the rice value chain. To overcome this, the concept of involving smallholders in post-farm value chain stages is promoted. The purpose of this paper is to explore the potential of upgrading smallholder involvement in rice value chains through the adoption of a sustainability standard.

Design/methodology/approach

The authors built a system dynamic model to capture both conventional and certified sub-value chains. The latter deviates from the conventional one and capitalizes on compliance to a sustainability standard.

Findings

When compared to conventional farm gate sales methods, the simulations revealed obvious profitability of direct marketing with respect to certified sustainable rice. Although coupled with productivity growth, the simulations indicated the shift to standard adoption would likely to be both limited and slow.

Originality/value

The findings suggest that the profitability of a certified rice value chain will remain fettered. In order to enhance both farmer livelihood and food security, given the limited prospect of moving smallholders up that chain, the authors conclude that national policy should be rationalized and concentrated on the possibility of diversifying the end-use of rice through research, development and subsequent commercialization.

Details

British Food Journal, vol. 122 no. 3
Type: Research Article
ISSN: 0007-070X

Keywords

Book part
Publication date: 30 September 2021

J. David Hacker, Michael R. Haines and Matthew Jaremski

The US fertility transition in the nineteenth century is unusual. Not only did it start from a very high fertility level and very early in the nation’s development, but it also…

Abstract

The US fertility transition in the nineteenth century is unusual. Not only did it start from a very high fertility level and very early in the nation’s development, but it also took place long before the nation’s mortality transition, industrialization, and urbanization. This paper assembles new county-level, household-level, and individual-level data, including new complete-count IPUMS microdata databases of the 1830–1880 censuses, to evaluate different theories for the nineteenth-century American fertility transition. We construct cross-sectional models of net fertility for currently-married white couples in census years 1830–1880 and test the results with a subset of couples linked between the 1850–1860, 1860–1870, and 1870–1880 censuses. We find evidence of marital fertility control consistent with hypotheses as early as 1830. The results indicate support for several different but complementary theories of the early US fertility decline, including the land availability, conventional structuralist, ideational, child demand/quality-quantity tradeoff, and life cycle savings theories.

Article
Publication date: 13 March 2009

Mason Gaffney

A tax based on land value is in many ways ideal, but many economists dismiss it by assuming it could not raise enough revenue. Standard sources of data omit much of the potential…

4073

Abstract

Purpose

A tax based on land value is in many ways ideal, but many economists dismiss it by assuming it could not raise enough revenue. Standard sources of data omit much of the potential tax base, and undervalue what they do measure. The purpose of this paper is to present more comprehensive and accurate measures of land rents and values, and several modes of raising revenues from them besides the conventional property tax.

Design/methodology/approach

The paper identifies 16 elements of land's taxable capacity that received authorities either trivialize or omit. These 16 elements come in four groups.

Findings

In Group A, Elements 1‐4 correct for the downward bias in standard sources. In Group B, Elements 5‐10 broaden the concepts of land and rent beyond the conventional narrow perception, while Elements 11‐12 estimate rents to be gained by abating other kinds of taxes. In Group C, Elements 13‐14 explain how using the land tax, since it has no excess burden, uncaps feasible tax rates. In Group D, Elements 15‐16 define some moot possibilities that may warrant further exploration.

Originality/value

This paper shows how previous estimates of rent and land values have been narrowly limited to a fraction of the whole, thus giving a false impression that the tax capacity is low. The paper adds 14 elements to the traditional narrow “single tax” base, plus two moot elements advanced for future consideration. Any one of these 16 elements indicates a much higher land tax base than economists commonly recognize today. Taken together they are overwhelming, and cast an entirely new light on this subject.

Details

International Journal of Social Economics, vol. 36 no. 4
Type: Research Article
ISSN: 0306-8293

Keywords

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