Market Power and the Volatility of Markups in the Food Value Chain: The Role of Italian Cooperatives

Hyejin Lee, Johan Swinnen and Patrick Van Cayseele

LICOS Discussion Papers from LICOS - Centre for Institutions and Economic Performance, KU Leuven

Abstract: Agricultural cooperatives have often been promoted as a way to increase their market power and to obtain stability of profit against uncertainty. This paper estimates the firm-level markups and markup volatility to identify the countervailing market power of cooperatives in the Italian fruits and vegetable sector and the dairy sector. We use the firm-level data of Italian firms for the period 2007-2014. We find that, overall, there is a tradeoff in cooperatives’ role between obtaining market power and stability. Farmer cooperatives in both sectors gain stability in their markups but their markups are lower, on average, than those for non-cooperatives. For processor cooperatives, the fruits and vegetable sector obtains more market power. This appears to arise from the product differentiation strategy of the processors cooperative.

Keywords: Cooperatives; market power; firm-level markups; volatility (search for similar items in EconPapers)
JEL-codes: D23 L44 Q13 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-agr, nep-com, nep-cwa, nep-eur, nep-hme and nep-ind
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https://feb.kuleuven.be/drc/licos/publications/dp/dp424

Related works:
Working Paper: Market Power and the Volatility of Markups in the Food Value Chain: The Role of Italian Cooperatives (2021)
Working Paper: Market power and the volatility of markups in the food value chain: the role of Italian cooperatives (2021)
Working Paper: Market power and the volatility of markups in the food value chain: the role of Italian cooperatives (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:lic:licosd:42421

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