Journal of Agricultural & Food Industrial Organization

Published by De Gruyter

Volume 10 Issue 1

January 2012

Issue of Journal of Agricultural & Food Industrial Organization

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Contents
Journal Overview

Article

March 16, 2012

Local Price Competition: The Case of Swedish Food Retailers

Joakim Gullstrand, Christian Jörgensen

Abstract

Swedish food prices have been an issue many years resulting in a number of studies by the Swedish Competition Authority. This paper sheds new light on the competitive situation by using a detailed dataset covering all Swedish food retailers. The dataset allows an assessment of the importance of price competition as well as whether the market is local or global. The results are unambiguous, and suggest that competition is substantial, but that it wears off quickly. The implications are that a variation in competition may be an important explanation for price variations within Sweden, and that the disciplinary effect of new formats focusing on low prices may be substantial.

March 27, 2012

The Pro-Competitive Effect of Coffee Cooperatives in Chiapas, Mexico

Anna B. Milford

Abstract

Imperfect competition among purchasers of coffee is a common problem for small scale producers. Producer-owned marketing cooperatives can reduce the market power of private purchasers and restore competition. Non-members as well as members of the cooperatives will then receive higher prices. In the present paper I carry out a theoretical and an empirical investigation into the effect of Fairtrade and organically certified cooperatives on local competition and coffee prices in Chiapas, Mexico. A theoretical model is presented which explains how the competitive effect may work in this particular setting, where cooperative membership implies certain costs that are perceived differently by different producers. Also, using both qualitative and quantitative methods, I present evidence that is consistent with the hypothesis of a pro-competitive effect of cooperatives.

April 24, 2012

Consumer Preferences for Eco, Health and Fair Trade Labels. An Application to Seafood Product in France

Dorothée Brécard, Sterenn Lucas, Nathalie Pichot, Frédéric Salladarré

Abstract

How are consumer attitudes towards eco-labeled products affected by a profusion of labels? This article provides both theoretical and empirical insight into this issue. Assuming that consumers perceive a label both as a sign of quality and of a particular characteristic of a product, we deduce theoretical determinants for preferences for three types of label: a health label, an eco-label and a fair trade label. We enrich this analysis by synthesizing most empirical determinants of eco-labeling demand mentioned in the literature. Using a French survey on seafood products, the estimation of a rank-ordered multinomial logit with random intercepts shows a certain proximity between the profiles of pro-eco-label and pro-fair trade label consumers, whereas pro-health label individuals have a more distinct profile: The two former are more likely to be young men mainly concerned with fishing conditions, whereas the latter are older married women with children who pay attention to the product form. We relate preferences for labels to degree of altruism, environmental consciousness and other socio-economic features.

April 26, 2012

Measuring Market Power and Welfare Losses in the Greek Food and Beverages Manufacturing Industry

Anthony Rezitis, Maria Kalantzi

Abstract

This article tests for the degree of market power in the Greek food and beverages manufacturing industry over the period 1983–2007 based on the Bresnahan’s conjectural variation model of competition. It also adopts the methodology of Dickson and Yu to estimate the net and the total welfare losses due to the possible existence of market power. The bootstrap method is applied to assign measures of accuracy to the statistical estimates. The empirical results indicate the presence of some degree of market power in the Greek food and beverages manufacturing industry and the existence of welfare losses.

July 13, 2012

Buyer Power and Vertically Differentiated Retailers

Christian Rojas, Nathalie Lavoie, Shinn-Shyr Wang

Abstract

We consider a model of vertical competition where retailers purchase an upstream input from a monopolist and are able to differentiate from each other in terms of quality. Our primary focus is to study the price, quality and welfare effects of introducing a large retailer, such as Costco or a Wal-Mart Supercenter, which is able to obtain lower wholesale prices (i.e., countervailing buyer power). We obtain two main results. First, the store with no buyer power (a “traditional retailer”) responds to the presence of the large retailer by increasing its quality, a finding that is consistent with recent efforts by traditional retailers to enhance consumers’ shopping experience. Second, the presence of a large retailer causes consumer welfare to increase through two different channels: a) the upstream discount obtained by the large retailer is partially passed on to the retail price, and b) a greater quality offered by the traditional retailer. Contrary to conventional wisdom, at low levels of countervailing power, most of the consumer welfare gains accrue to consumers with the highest willingness to pay for quality, due to the latter channel.

October 5, 2012

Picking Apples: Can Multi-Attribute Ecolabels Compete?

Catherine A. Durham, Cathy A. Roheim, Iain Pardoe

Abstract

Global food markets in Europe, the U.S. and elsewhere, are experiencing a rapid growth in the number of private party and government environmental labeling programs. Most current ecolabels are defined by standards related to multiple environmental practices. This study presents an analysis of consumers’ choice of food products, in this case apples with or without ecolabels, where the ecolabels present varying combinations of farm practices with implications for environmental quality. These practices include: whether or not standards are met specific to on-farm pest management; presence of stream or groundwater quality protection; presence of on-farm wildlife habitat provision; and which certifier provides the guarantee. Factors influencing consumer preferences for ecolabel attributes are evaluated as a choice-based conjoint analysis. To empirically test the effect of heterogeneity of consumers on preferences for ecolabel attributes, surveys were conducted in a stratified sample in three regions (Portland, Oregon; Minneapolis, Minnesota; Rhode Island) with a focus on sampling across shoppers at different types of markets including conventional supermarkets, farmers markets, natural food stores and food co-ops. Results show that preferences for ecolabels are most strongly driven by type of pesticide usage, in particular for non-synthetic pesticides which were identified with organic production. With an appropriate price premium, ecolabels with an alternative pest management practice and other environmental practices were preferred to conventionally produced apples. These results varied according to age and gender of respondents, and type of store at which respondents shopped.

October 11, 2012

Can Labeling and Information Policies Harm Consumers?

Jayson L. Lusk, Stéphan Marette

Abstract

Information and labeling are popular food policy instruments because of their presumed positive influence on consumer welfare. In a one-good case with unlimited attention, we show consumer welfare is always improved with the provision of accurate information. However, in a two-good case with limited attention, we show that consumer welfare is not always improved with the provision of accurate information. When attention is constrained, welfare may fall with information provision policies irrespective of their costs. The results suggest information and labeling polices may sometimes be counterproductive when attention is limited.

October 31, 2012

Processor's Preferences and Basic Differentiation Strategies for Potatoes, Milk, and Wheat in Switzerland

Irene Boesch, Michael Weber

Abstract

In this paper, we aim to shed light on processors’ preferences for attributes of wheat, industrial potatoes as well as fresh milk and assess the potential for differentiation strategies for Swiss farmers. Thus, we determine the attributes and levels that drive the buying decisions of Swiss processing companies. We then determine the relative importance of each attribute using adaptive choice–based conjoint analysis and hierarchical Bayes estimation methods. We apply randomized first-choice models to evaluate three differentiation strategies: 1) targeting processor preferences, 2) targeting the final consumers’ preferences, and 3) following a country-of-origin strategy. Results show that although price is an important buying criterion, environmental attributes and country of origin can be used to segment the market if the price difference is held within limits and technical and quality requirements are met. Strategies focusing on attributes valued by final customers prove promising for the milk market, while targeting industrial buyers’ internal preferences is more suitable for the industrial potato market. In the wheat market, the three strategies are almost equally important. Focusing on country of origin is less important in all three markets. Additionally, the different results for the different primary products indicate the need to design strategies by looking closely at the specific market and final good in question.

November 1, 2012

The Impact of Food Environment on Private Label versus Branded Produce Choice

Christiane Schroeter, Xiaowei Cai

Abstract

Over the past two decades, retailers are providing more Private label foods (PL), which are directly competing with the National brand (NB) products. For years, PLs competed as generic and cheaper versions with their high-priced NB substitute. However, modern PLs have improved in product quality relative to NBs and are available in the premium, organic, and even produce sections with the goal to distinguish themselves from their competitors’ product lines. One of the fastest growing segments in the produce industry consists of triple-washed cello-packed spinach. Using a two-step Heckman model, we determine the impact of household purchase information, demographics, and food environment on PL spinach purchasing behavior. Given its regional dominance with regard to spinach production and fresh spinach consumption, we focus on households residing in the U.S. West. Results show that food environment is the main driver for PL spinach purchases. We determine that specialty stores might be traditional channels for purchasing organic PL spinach, while supercenters might take the role of the main outlet for conventional NBs. An understanding of what factors might encourage increased consumption of healthful foods is important to producers and marketers for developing effective strategies in order to reach beyond the traditional consumer base.

November 18, 2012

The success of new exporting countries in a traditional Agri-business industry, 1961-2005

Osiris J. Parcero, Emiliano Villanueva

Abstract

This paper looks at the evolution of the world wine industry in the period 1961-2005. A particular stylized fact is the appearance of non-traditional producing and exporting countries of wine from the beginning of the nineties. We show that the success of these new producing and exporting countries can be explained by the importance of the demand from non-producing countries with little or no tradition of wine consumption, relative to the world demand. This stylized fact is consistent with a testable implication of the switching cost literature and to the best of our knowledge this is the first time that this implication is tested.

About this journal

Objective
The Journal of Agricultural & Food Industrial Organization (JAFIO) is a unique forum for empirical and theoretical research in industrial organization with a special focus on agricultural and food industries worldwide.

As concentration, industrialization, and globalization continue to reshape horizontal and vertical relationships within the food supply chain, agricultural economists are revising both their views of traditional markets as well as their tools of analysis. At the core of this revision are strategic interactions between principals and agents, strategic interdependence between rival firms, and strategic trade policy between competing nations, all in a setting plagued by incomplete and/or imperfect information structures. Add to that biotechnology, electronic commerce, as well as the shift in focus from raw agricultural commodities to branded products, and the conclusion is that a "new" agricultural economics is needed for an increasingly complex "new" agriculture.

Published in conjunction with the Center for Agricultural and Food Industrial Organization at the University of Nebraska, the Journal of Agricultural & Food Industrial Organization is the only international journal devoted solely to theoretical and empirical industrial organization as applied to agricultural and food systems which link input suppliers, farmers, processors, and retailers. All submissions are reviewed by at least one member of the editorial board, which consists of distinguished economists specializing in food and agriculture, and are guaranteed to receive a decision within 10 weeks, with the first review coming within one month.

JAFIO's mission is to provide a peer-reviewed, scholarly, international forum to address this new complexity with the added benefits mentioned above. Through electronic submission, revision, and publication, manuscripts will no longer become obsolete because of lengthy reviews and/or waiting in the print line, as they often do in traditional paper journals.

What scholars are saying about Journal of Agricultural & Food Industrial Organization

I frequently use this journal for my own research and think of it as a very valuable source for teaching and research.
Hendrik Wolff, Assistant Professor, University of Washington

Topics

Regulatory economics and competition policy
Horizontal and vertical coordination
Mergers and acquisitions
Contracts
Auctions
Product differentiation
Food labeling
Food safety
Cooperatives and strategic alliances
Economics of innovation and property rights
Strategic trade
Market structure and environmental economics
Political economy

Article formats
The journal welcomes empirical as well as theoretical articles, notes, and perspectives. It is expected that both empirical and theoretical contributions are issue-driven, informed by the idiosyncrasies of food and agricultural markets, and have practical relevance to firm strategy and/or agricultural and food industry policy.

Submissions addressing issues which arise in specific antitrust cases in food and agricultural industries, or issues which arise in reconciling antitrust laws with modern industrial organization theory, are also welcomed.

Information on submission process