Measuring Returns to an Innovation in an Imperfectly Competitive Market: Application to Mechanical Harvesting of Processing Tomatoes in Taiwan

Abstract

In this paper we develop and apply a general imperfect competition model to evaluate returns to a cost-reducing innovation. Most related work has applied models of perfect competition. Results demonstrate that welfare estimates derived from a model of perfect competition may be seriously distorted when the relevant market is imperfectly competitive. Application to mechanical harvesting of processing tomatoes in Taiwan reveals the potential for significant benefits to adoption of mechanical harvesting in Taiwan. However, farmers' incentives to adopt the harvester are attenuated because total benefits are reduced by oligopsony power in tomato procurement, and imperfectly competitive processors will capture a large share of the benefits that remain. Copyright 1996, Oxford University Press.

Asymmetric farm–retail price transmission and market power: a new test

“…Given these results, a simple welfare model, as shown in Equation 19, can be used to calculate the impact of market power on strawberry grower surplus (Huang and Sexton, 1996;Richards et al, 2001). The simulation results show that on average growers lost about 3 cents per pound to market power.…”

“…One of the measures that can be used for evaluating the impact of increased buyers' market power in strawberry market is the producer surplus (Huang and Sexton, 1996;Richards et al, 2001). Given a simplified input supply functions w ¼ V where X is the supply of fresh strawberries, the difference in producer surplus between competitive ( ¼ 0) and imperfectly competitive (40) market structures (PS diff ) can be expressed as…”

Imperfect competition, functional forms, and the size and distribution of research benefits

“…The basic imperfect competition model where P represents the market price, QI' is the market Following Huang and Sexton (1996) and Alston et al (1997), we model research benefits under imperfect competition through use of the so-called 'conjectural variation'. The basic imperfect competition model where P represents the market price, QI' is the market Following Huang and Sexton (1996) and Alston et al (1997), we model research benefits under imperfect competition through use of the so-called 'conjectural variation'.…”

“…Most of this literature, however, has assumed extreme forms of imperfect competition, with only a few studies (Huang and Sexton, 1996;Alston et al, 1997;Hamilton and Sun ding, 1998) having used more realistic oligopoly/ oligopsony models to explore the effects of imperfect competition on the size and distribution of research benefits. Most of this literature, however, has assumed extreme forms of imperfect competition, with only a few studies (Huang and Sexton, 1996;Alston et al, 1997;Hamilton and Sun ding, 1998) having used more realistic oligopoly/ oligopsony models to explore the effects of imperfect competition on the size and distribution of research benefits.…”

The Effects of ITQ Management on Fishermen's Welfare When the Processing Sector Is Imperfectly Competitive

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