Have we been Mugged? Market Power in the World Coffee Industry

Christopher L. Gilbert ()

No 725, Department of Economics Working Papers from Department of Economics, University of Trento, Italia

Abstract: The coffee industry is highly concentrated both at the retail and export stages. A number of recent commentaries have suggested that this concentration translates into monopolistic and monopsonistic pricing to the detriment of both consumers and farmers. Using time series data for eight major coffee-consuming countries and nine coffee exporters, we find that both retail and export markets have increased in competitiveness over recent decades. Retail markets in traditional coffee-consuming countries are close to being fully competitive but there is evidence of exercise of monopoly power in the non-traditional Japan and UK markets. On the export side, market liberalization has reduced the exercise of monopsony power in most, but not all, exporting countries.

Date: 2007
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