Traders' market power along Indonesian rubber value chains. Issue 2 (2nd May 2017)

• Record Type: Journal Article
• Authors: Kopp, Thomas; Brümmer, Bernhard
• Is Part Of: China agricultural economic review. Volume 9:Issue 2(2017)
• Page Start: 169
• Page End: 187
• Publication Date: 2017-05-02
• Subjects: Agricultural markets -- Agribusiness -- Lerner index -- Marginal value products -- Market power -- Trader survey; Agriculture -- Economic aspects -- China -- Periodicals; Rural development -- China -- Periodicals; Agriculture and state -- China -- Periodicals; 338.10951
• DOI: 10.1108/CAER-07-2015-0080
• Languages: English
• ISSNs: 1756-137X

Abstract

Abstract : Purpose: While traders of agricultural products are known to often exercise market power, this power has rarely been quantified for developing countries. The paper aims to discuss this issue. Design/methodology/approach: In order to derive a measure, the authors estimate the traders' revenue functions and calculate the marginal value products directly from them. The authors subsequently find the determinants affecting their individual market power. Findings: Results show that market power at the traders' level exists and is substantial. This market power is amplified in situations of extreme remoteness, and weakens with increasing market size. Originality/value: An exceptional data set with detailed information on the business practices of rubber traders in Jambi, Indonesia is employed with an innovative methodology to directly estimate revenue functions.