Farmers, Middlemen and Exporters: A Model of Market Power, Pricing and Welfare in a Vertical Supply Chain. Issue 1 (February 2015)

• Record Type: Journal Article
• Authors: Bjorvatn, Kjetil; Milford, Anna B.; Sørgard, Lars
• Is Part Of: Review of development economics. Volume 19:Issue 1(2015:Feb.)
• Page Start: 31
• Page End: 44
• Publication Date: 2015-02
• Subjects: Economic development -- Periodicals; 330
• DOI: 10.1111/rode.12121
• Languages: English
• ISSNs: 1363-6669

Abstract

<abstract abstract-type="main"> <title>Abstract</title> <p>Markets for cash‐crops in developing countries are typically characterized by a concentration of buyer power at different levels of the supply chain. For instance, small‐scale coffee farmers sell their produce to a middleman, who in turn sells the coffee onward to an exporter, often a foreign multinational, with monopsony power in the hands of the purchasers at both levels. We analyze pricing behavior and welfare with different assumptions regarding market power. In particular, we show that a more powerful exporter is likely to benefit the producers and may even lead to higher welfare for the producer country as a whole.</p> </abstract>