12 research outputs found
Location and Spatial Pricing in Agricultural Markets
Agricultural markets often feature significant transport costs and spatially distributed production and processing which causes spatial imperfect competition. Spatial economics considers the firmsā decisions regarding location and spatial price strategy separately, usually on the demand side, and under restrictive assumptions. Therefore, alternative approaches are needed to explain, e.g., the location of new ethanol plants in the U.S. at peripheral as well as at central locations and the observation of different spatial price strategies in the market. We use an agent-based simulation model to analyze location and spatial pricing in a general model under multi-firm competition, two-dimensional space, and a continuum of potential price strategies. The results show, e.g., that depending on the location of a processor, different price strategies can be observed, spatial price discrimination can increase with the number of competitors, and elasticity in the producersā supply functions can be identified as stabilizing factor of processorās location.spatial competition, location, price discrimination, oligopsony, simulation, Industrial Organization, Research Methods/ Statistical Methods, C63, Q11, R32,
Spatial Pricing and the Location of Processors in Agricultural Markets
Spatially dispersed production and processing, endemic for most agricultural or renewable resource markets, causes oligopsonistic competition. The possibility and use of spatial price discrimination in these markets is well documented. It is also well known that the location of processors relative to competitors crucially affects the intensity of competition. However, insights regarding the relation between spatial price discrimination and the spatial differentiation of firms are barely present because the simultaneous investigation of these issues is often intractable analytically. We use computational economics to study these problems under a general theoretical framework. For instance, we show whether and under which conditions firms choose to differentiate their locations and/or price strategies. Results are consistent with observations in agricultural markets.spatial price competition, spatial differentiation, price discrimination, computational economics, Agribusiness,
Cooperative vs. Non-Cooperative Spatial Competition for Milk in the Presence of Farm Marketing Cooperatives
Although important, the spatial dimension is often neglected in studies of market power and competition in agricultural markets. This paper investigates spatial competition for raw milk between dairies under the presence of marketing cooperatives. Since observed in reality, our model is based on uniform delivered pricing and overlapping market areas. We compare spatial cooperative price matching with non-cooperative Hotelling-Smithies conduct. Utilizing a vector error correction model we show that the observed low price transmission in Germany is in line with cooperative behaviour. This seems rational since it increases processors profits. The abolition of the quota system may increase price transmission.spatial competition, uniform delivered pricing, price transmission, horizontal cooperation, VECM, Marketing,
The Spatial Agent-based Competition Model (SpAbCoM)
The paper presents a detailed documentation of the underlying concepts and methods of the
Spatial Agent-based Competition Model (SpAbCoM). For instance, SpAbCoM is used to
study firmsā choices of spatial pricing policy (GRAUBNER et al., 2011a) or pricing and location under a framework of multi-firm spatial competition and two-dimensional markets (GRAUBNER et al., 2011b). While the simulation model is briefly introduced by means of relevant examples within the corresponding papers, the present paper serves two objectives. First, it presents a detailed discussion of the computational concepts that are used, particularly with respect to genetic algorithms (GAs). Second, it documents SpAbCoM and provides an overview of the structure of the simulation model and its dynamics. Das vorliegende Papier dokumentiert die zugrundeliegenden Konzepte und Methoden des
RƤumlichen Agenten-basierten Wettbewerbsmodells (Spatial Agent-based Competition Model)SpAbCoM. Anwendungsbeispiele dieses Simulationsmodells untersuchen die Entscheidung bezĆ¼glich der rƤumlichen Preisstrategie von Unternehmen (GRAUBNER et al., 2011a) oder
Preissetzung und Standortwahl im Rahmen eines rƤumlichen Wettbewerbsmodells, welches mehr als einen Wettbewerber und zweidimensionalen Marktgebiete berĆ¼cksichtigt. WƤhrend das
Simulationsmodell in den jeweiligen Arbeiten kurz anhand eines Beispiels eingefĆ¼hrt wird, dient das vorliegende Papier zwei Zielen. Zum Einen sollen die verwendeten computergestĆ¼tzten Konzepte, hier speziell Genetische Algorithmen (GA), detailliert vorgestellt werden. Zum Anderen besteht die Absicht dieser Dokumentation darin, einen Ćberblick Ć¼ber die Struktur von SpAbCoM und die wƤhrend einer Simulation ablaufenden Prozesse zu gegeben
Spatial Pricing on Land Rental Markets
This paper analyzes spatial competition on land rental markets. It contributes to the small body of literature that investigates the optimal spatial price policy under competition and extents previous work by considering economies of size. Because the consideration of increasing or decreasing returns of additional land and the endogenous choice of spatial pricing is analytically intractable, a computational economics approach is used to simulate spatial pricing in the presence of economies of size. This paper is a first step towards a spatial competition model of a land rental market and based on selected simulations it shows that price discrimination is likely to arise
Agroholdings and Land Rental Markets: A Spatial Competition Perspective
With the emergence of large, horizontally integrated farm enterprises especially in Eastern European countries, the question arises whether these agroholdings exercise market power in (local) land markets. Using a theoretical framework of spatial competition that accounts for the presence of multi-farm agroholdings, we derive equilibrium prices under alternative spatial competition settings. Based on the investigation of Ukrainian farms, we provide a theoretical explanation and empirical support that farms affiliated with an agroholding possess (ceteris paribus) more land and set higher land rental prices compared to independent farms. The results indicate that agroholdings can act as price leaders in local land markets
Spatial Pricing and the Location of Processors in Agricultural Markets
Spatially dispersed production and processing, endemic for most agricultural or renewable
resource markets, causes oligopsonistic competition. The possibility and use
of spatial price discrimination in these markets is well documented. It is also well
known that the location of processors relative to competitors crucially affects the intensity
of competition. However, insights regarding the relation between spatial price
discrimination and the spatial differentiation of firms are barely present because the
simultaneous investigation of these issues is often intractable analytically. We use computational
economics to study these problems under a general theoretical framework.
For instance, we show whether and under which conditions firms choose to differentiate
their locations and/or price strategies. Results are consistent with observations in
agricultural markets
Location and Spatial Pricing in Agricultural Markets
Agricultural markets often feature significant transport costs and spatially distributed production and processing which causes spatial imperfect competition. Spatial economics considers the firmsā decisions regarding location and spatial price strategy separately, usually on the demand side, and under restrictive assumptions. Therefore, alternative approaches are needed to explain, e.g., the location of new ethanol plants in the U.S. at peripheral as well as at central locations and the observation of different spatial price strategies in the market. We use an agent-based simulation model to analyze location and spatial pricing in a general model under multi-firm competition, two-dimensional space, and a continuum of potential price strategies. The results show, e.g., that depending on the location of a processor, different price strategies can be observed, spatial price discrimination can increase with the number of competitors, and elasticity in the producersā supply functions can be identified as stabilizing factor of processorās location