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1 – 1 of 1Mohammad Chhiddikur Rahman, Valerien Pede, Jean Balie, Isabelita M. Pabuayon, Jose M. Yorobe and Samarendu Mohanty
Because of the increasing differential between farm and retail prices, the study proposes to investigate the extent of market power in the rice value chain of Bangladesh using…
Abstract
Purpose
Because of the increasing differential between farm and retail prices, the study proposes to investigate the extent of market power in the rice value chain of Bangladesh using advanced econometric techniques.
Design/methodology/approach
Using a Stochastic Frontier Estimation approach on cross-sectional data, the study examines the price spread along the rice value chain to determine whether millers and wholesalers exercise market power.
Findings
Empirical results reveal that, on average, rice millers and wholesalers charge 33 and 29% above the marginal cost, respectively. This study confirms the non-competitive behavior of the rice market with wholesalers and millers wielding substantial market power
Research limitations/implications
A limitation of the study is that it does not include the retailers who also play a major role in the Bangladesh rice value chain. This is left for future study.
Originality/value
This study combines primary and secondary data collected on the Bangladesh rice sector to examine the market power of two major players along the value chain, millers and wholesalers, using an advanced econometrics approach.
Details