Strategic Interactions, Risks and Coordination Costs in Food Marketing Channels: The Mediating Role of Futures Markets

John Kuwornu (jkuwornu@gmail.com), W. Erno Kuiper, Joost Pennings (joost.pennings@maastrichtuniversity.nl) and Matthew T.G. Meulenberg

No 7740, 99th Seminar, February 8-10, 2006, Bonn, Germany from European Association of Agricultural Economists

Abstract: We examine the interaction of marketing channel members and the influence of these interactions on incentives, coordination costs, and risk allocation strategies in a food marketing channel. For this purpose we specify a three-stage principal-agent marketing channel model involving producers, wholesalers, retailers and a futures market. We compare the situation with and without futures market. The empirical results regarding the Dutch ware potato marketing channel during 1971-2003 reveals that, possibly as a result of increases in incentives to producers and wholesalers, the coordination costs of the marketing channel decreased significantly, both with and without futures trade. The coordination costs of a marketing channel with a futures market are lower than without futures, demonstrating the price discovery role of the futures markets. The results also show that risk shifted from retailers to producers and wholesalers.

Keywords: Agribusiness; Marketing (search for similar items in EconPapers)
Pages: 15
Date: 2006
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae99:7740

DOI: 10.22004/ag.econ.7740

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