Agricultural Exports, Market Power, and Deforestation

Exportations agricoles, pouvoir de marché et déforestation

Clément Nedoncelle (), Philippe Delacote and Léa Crepin
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Clément Nedoncelle: UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Léa Crepin: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CEC - Chaire Economie du Climat - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres

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Abstract: This paper explores how market structure shapes agricultural production and environmental outcomes, particularly deforestation. We focus on the soybean export sector in Brazil-a major driver of deforestation. We show that large exporters, operating within an oligopolistic market, exert market power by purchasing soybeans at lower prices (markdown) rather than raising prices for foreign consumers. Providing both theoretical and empirical evidence, our results suggest that this markdown behavior reduces soybean production and deforestation. Using data from 2004-2017, we find that higher market concentration, as measured by the Herfindahl-Hirschman Index (HHI), is associated with lower soybean production and deforestation. Our findings highlight the importance of trade-related supply chains in understanding deforestation dynamics.

Keywords: Market power; markdown; exporters; deforestation (search for similar items in EconPapers)
Date: 2024-02
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04934081v1
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