Oligopolistic Market Structure in the Japanese Pistachio Import Market : Journal of Agricultural & Food Industrial Organization

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Journal of Agricultural & Food Industrial Organization

Ed. by Azzam, Azzeddine


SCImago Journal Rank (SJR) 2014: 0.207
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Oligopolistic Market Structure in the Japanese Pistachio Import Market

1Department of Agricultural Economics, University of Kentucky, 302 Barnhart Building, Lexington, KY 40546, USA

Citation Information: Journal of Agricultural & Food Industrial Organization. Volume 11, Issue 1, Pages 87–99, ISSN (Online) 1542-0485, ISSN (Print) 2194-5896, DOI: 10.1515/jafio-2013-0005, September 2013

Publication History

Published Online:
2013-09-17

Abstract

Iran is the major producer of pistachio nuts in the world. Iran dominated the international pistachio export markets until 1982, when a new competitor, the United States, emerged in the international markets. Currently, both Iran and the United States are major pistachio exporters to Japan. In this study, we address the following empirical question: Is the Japanese pistachio import market best characterized by Cournot or Bertrand duopoly competition or some other form of game? We use two historical data sets on pistachio prices and quantities imported by Japan from Iran and the United States and estimate the demand functions for these two main exporters. Considering two different strategic variables, quantity and price, full information maximum likelihood (FIML) resulted in different estimates. We used normalized likelihood ratio statistics for the model comparison. Having proper game-specific nonlinear-equation restrictions enabled us to form six alternative models. The model that best fit the data was the Stackelberg model with US quantity leadership.

Keywords: oligopolistic markets; Cournot model; Bertrand model; Stackelberg model; likelihood ratio tests; pistachio nuts; Japan

JEL Codes: Q17; F12; C72

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