Farm Gate Prices for Non-Varietal Wine in Argentina: A Multilevel Comparison of the Prices Paid by Cooperatives and Investor-Oriented Firms

Malvido Perez Carletti Agustina (), Hanisch Markus, Jens Rommel and Fulton Murray
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Malvido Perez Carletti Agustina: Humboldt Universität zu Berlin, Faculty of Life Sciences, Berlin, Germany
Hanisch Markus: Humboldt Universität zu Berlin, Faculty of Life Sciences, Berlin, Germany
Fulton Murray: University of Saskatchewan, Johnson-Shoyama Graduate School of Public Policy, Saskatoon, Canada

Journal of Agricultural & Food Industrial Organization, 2018, vol. 16, issue 1, 14

Abstract: In this paper, we use a unique data set of the prices paid to farmers in Argentina for grapes to examine the prices paid by non-varietal wine processing cooperatives and investor-oriented firms (IOFs). Motivated by contrasting theoretical predictions of cooperative price effects generated by the yardstick of competition and property rights theories, we apply a multilevel regression model to identify price differences at the transaction level and the departmental level. On average, farmers selling to cooperatives receive a 3.4 % lower price than farmers selling to IOFs. However, we find cooperatives pay approximately 2.4 % more in departments where cooperatives have larger market shares. We suggest that the inability of cooperatives to pay a price equal to or greater than the one paid by IOFs can be explained by the market structure for non-varietal wine in Argentina. Specifically, there is evidence that cooperative members differ from other farmers in terms of size, assets and the cost of accessing the market. We conclude that the analysis of cooperative pricing cannot solely focus on the price differential between cooperatives and IOFs, but instead must consider other factors that are important to the members.

Keywords: competitive yardstick; pricing policies; non-varietal wine; Mendoza; Argentina (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (5)

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DOI: 10.1515/jafio-2016-0036

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