The Theory of Price Collars: The Linking of Prices in a Market Channel to Redress the Exercise of Market Power

Li Tian and Ronald Cotterill ()

No 149025, Research Reports from University of Connecticut, Food Marketing Policy Center

Abstract: The marketing channels for many goods involve the production of a raw commodity that is processed and then distributed to retailers for sale to consumers. Either the processing industry or the retailing industry or both may exercise substantial market powe r ultimately against raw commodity suppliers or consumer s, the disorganized (competitive) economic groups at the ends of the market channel. This paper develops a theory of price collars to regulate pricing in such a channel. Price collars link raw product, wholesale and retail prices but do not explicitly set such prices. For example, a wholesale price collar could limit the wholesale price to 140% of the raw commodity price, and a retail price collar could limit retail price to 130% of the wholesale price.

Keywords: Demand; and; Price; Analysis (search for similar items in EconPapers)
Pages: 23
Date: 2004-04
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:uconnr:149025

DOI: 10.22004/ag.econ.149025

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