Bargaining power and risk from substitutability between products attributes the case of specialty eggs in Canada

Baoubadi Atozou, Lota Tamini and Maurice Doyon

Agricultural Economics, 2022, vol. 53, issue 1, 155-169

Abstract: Supply managementpolicy covers conventional egg production in Canada and uses production costs to determine producer prices. The context differs for specialty eggs since graders and farmers individually negotiate the price premiums. Because specialty egg production, such as cage‐free or organic production, involves important fixed‐cost farm investment, it is of interest to assess potential bargaining power in the value chain, especially given the significant commitments from Canadian retail stores and fast food restaurants to move exclusively to cage‐free eggs in the coming years. This article develops a theoretical model of joint profit maximization and price adjustment under risk. Due to data availability, a reduced version of the proposed model is used to empirically test the bargaining power along the value chain for specialty eggs. Although the estimations concentrate on the bargaining power of producers, other actors in the value chain are considered. The results show that the bargaining power of downstream actors is greater than that of producers in most provinces and for most specialty eggs.

Date: 2022
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