Co-specific investment and integration in the agrifood chain

Li Feng and Kostas Karantininis

No 182673, 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia from European Association of Agricultural Economists

Abstract: We develop a holdup model where multiple parties in the food chain (input suppliers, farmers, and buyers of the produce) invest in co-specific assets necessary for an innovative product. Shapley value is used in a multilateral bargaining game to assign bargaining power to the players, which correspondingly determines the surplus division.The conditions under which holdup is avoided and Pareto improving exchange will obtain are demonstrated. Two market responses to the holdup problem are considered. One is partial redistribution of specific investment costs serving as a credible commitment. The other is vertical/lateral integration, which changes the distribution of bargaining power.

Keywords: Industrial; Organization (search for similar items in EconPapers)
Pages: 10
Date: 2014-08
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/182673/files/F ... food_chain-444_a.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae14:182673

DOI: 10.22004/ag.econ.182673

Access Statistics for this paper

More papers in 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia from European Association of Agricultural Economists Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().