The Farm-Retail Price Spread in an Imperfectly Competitive Food Industry

Holloway, G. ORCID: https://orcid.org/0000-0002-2058-4504 (1991) The Farm-Retail Price Spread in an Imperfectly Competitive Food Industry. American Journal of Agricultural Economics, 73 (4). pp. 979-989. ISSN 0002-9092 doi: 10.2307/1242425

Abstract/Summary

Gardner's popular model of perfect competition in the marketing sector is extended to a conjectural-variations oligopoly with endogenous entry. Revising Gardner's comparative statics on the "farm-retail price ratio," tests of hypotheses about food industry conduct are derived. Using data from a recent article by Wohlgenant, which employs Gardner's framework, tests are made of the validity of his maintained hypothesis-that the food industries are perfectly competitive. No evidence is found of departures from competition in the output markets of the food industries of eight commodity groups: (a) beef and veal, (b) pork, (c) poultry, (d) eggs, (e) dairy, (f) processed fruits and vegetables, (g) fresh fruit, and (h) fresh vegetables.