Estimating oligopsonistic market power in Uganda’s rice industry

Edgar E. Twine, Stella E. Adur-Okello and Gaudiose Mujawamariya

Agrekon, 2023, vol. 62, issue 3-4, 292-308

Abstract: The study applies the conjectural variations approach to determine whether Ugandan rice traders exercise oligopsony power in the market for domestic rice. The trader margin for milled rice is found to be 10.20% on average. Using an econometric system of four equations, the null hypothesis of competitive behaviour holds at different price elasticities of farm supply, ranging from inelastic to elastic supply. This implies that there is no evidence that rice traders apply oligopsony power when procuring milled rice from farmers. However, since the study does not examine the existence of trader bargaining power, we cannot completely rule out the existence of market power at this node of the value chain. Therefore, future studies should examine trader bargaining power to be able to ultimately determine if there is need to intervene at this segment of rice value chains to ensure competitive behaviour.

Date: 2023
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DOI: 10.1080/03031853.2023.2253795

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