Grocery Retailer Behavior in Perishable Fresh Produce Procurement

Sexton Richard J., Zhang Mingxia and James Chalfant ()
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Sexton Richard J.: University of California-Davis
Zhang Mingxia: California Independent System Operator

Journal of Agricultural & Food Industrial Organization, 2005, vol. 3, issue 1, 23

Abstract: This study examines supermarket retailer behavior in the procurement of iceberg lettuce from California and Arizona, vine-ripe and mature-green tomatoes from California, and mature-green tomatoes from Florida. The analysis relies upon both a reduced-form specification of farm-retail price spreads and a structural model of procurement for a perishable commodity with inelastic supply. The evidence supports a conclusion that buyers have been able to exercise oligopsony power in procuring iceberg lettuce from grower-shippers in California and Arizona. The evidence regarding buyer market power is more mixed for fresh tomatoes. The apparent success of the Florida mature-green tomato industry in enforcing a price floor and capturing a significant share of the surplus in excess of the price floor demonstrates the potential benefits to producers from coordinated behavior.

Keywords: grocery retailer; lettuce; oligopsony; price spread; tomatoes (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (12)

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DOI: 10.2202/1542-0485.1090

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