Traders’ market power along Indonesian rubber value chains

Thomas Kopp and Bernhard Brümmer

China Agricultural Economic Review, 2017, vol. 9, issue 2, 169-187

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.

Keywords: Agricultural markets; Agribusiness; Lerner index; Marginal value products; Market power; Trader survey (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:caerpp:caer-07-2015-0080

DOI: 10.1108/CAER-07-2015-0080

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