Price Discrimination in the Context of Vertical Differentiation: An Application to Canadian Wheat Exports

This study examines the ability of the Canadian Wheat Board (CWB) to price discriminate in bread wheat exports. This study models wheat as a vertically differentiated intermediate good and modifies the model of vertical differentiation by Mussa and Rosen to the realities of wheat import demand. The conceptual model isolates the bases of price discrimination and demonstrates that the CWBs ability to exploit cost differences in pricing depends on the extent of the differentiation between Canadian and U.S. wheat. This model is implemented using monthly confidential price data provided by the CWB for exports to Japan, the United Kingdom, and two markets aggregating remaining exports through Canadas west and east coasts, for 1982 1994. The data indicate that the CWB charges different prices to different countries for wheat of the same grade and protein content. Results from the model indicate that the price difference between any two markets is not completely explained by elements of perfect competition. However, the evidence is mixed regarding the ability of the CWB to utilize all the instruments available to price discriminate. Thus, the CWBs pricing strategy may be more complex and dynamic than the prescription for static producer surplus maximization derived in this study.Crop Production/Industries, Demand and Price Analysis, Industrial Organization, International Relations/Trade,

Effectiveness of COOL in the U.S. Seafood Industry

Replaced with revised version of paper 06/10/08International Relations/Trade, Livestock Production/Industries,

FINDINGS OF PRICING-TO-MARKET: MARKET SEGMENTATION OR PRODUCT DIFFERENTIATION?

Pricing to market (PTM) has been examined extensively in the recent trade literature using Knetter's (1989) model. The technique is typically applied using export unit values that aggregate differentiated products. We examine the potential bias in PTM results when using export unit values using a vertical differentiation model. We find that: i) false evidence of PTM ("pseudo PTM") is always found due to aggregation when calculating export unit values, whether the law of one price (LOP) holds or not; ii)when markets are segmented, the fraction of pseudo PTM increases with the level of product differentiation. Correspondingly, our simulation results suggest that: i) it is possible to get a statistically significant estimate of the exchange rate coefficient, even when there is no real PTM; ii) the significance of the estimate increases with product differentiation.Marketing,

The Effect of Wal-Mart Supercenters on Grocery Prices in New England

This study analyzes the effect of the presence of Wal-Mart Supercenters on the prices at conventional supermarkets in Massachusetts, Connecticut, and Rhode Island. Using price indexes constructed from primary price data on a basket of 54 goods and holding several demographics and market conditions constant, we determine that Supercenters result in a 7.79% average price reduction in national brand goods and a 6.38% average price reduction in private label goods. Wal-Mart Supercenters also price their groceries on average 15.65% lower than supermarkets competing with Supercenters and 22.28% lower than supermarkets geographically distant from Supercenters.Marketing,

Local Buyer Market Power and Horizontally Differentiated Manufacturers

In this paper we study a farmer-processor relationship, where market power is bidirectional: processors have buyer as well as seller market power. Farmers supply a homogeneous raw input to the processors, which, in turn, process it into a horizontally differentiated product. The analysis shows that the spread between prices that both parties receive can be decomposed into two components: one due to buyer market power in the agricultural input market and one due to seller market power in the differentiated processed market. Farmers receive a decreasing dollar share of the final price as concentration in the processed good market increases. On the other hand, the price spread due to processors' buyer (seller) market power decreases (increases) when farmers' transportation costs shrink and when consumers' strength for brand preference increases. We also examine welfare: while the surplus of farmers serving a specific processor is adversely affected in a more concentrated processed good market, the total surplus of farmers serving all processors is independent of the industry concentration. In addition, consumers are worse off when the processed good market is more concentrated and farmers' transportation costs are larger. While stronger brand preference implies a larger "travel cost" for consumers, it may encourage more processors to join the market and provide more varieties.buyer market power, horizontal differentiation, Agribusiness, Industrial Organization, Marketing, D43, L13, M31, Q13,

Buyer Market Power and Vertically Differentiated Retailers

We consider a model of vertical competition where downstream firms (retailers) purchase an upstream input from a monopolist and are able to differentiate from each other in terms of quality. Our primary focus is to study the effects of introducing a large retailer, such as a Wal-Mart Supercenter, that is able to lower wholesale prices (i.e. buyer market power). We obtain two main results. First, the store with no buyer market power responds to the presence of the large retailer by increasing its quality, a finding that is consistent with recent efforts by traditional retailers to enhance shoppers’ buying experience (i.e. quality). Second, the presence of a large retailer causes consumer welfare to increase. There are, however, two reasons for the increase in consumer welfare: consumers gain from the large retailer’s low price (because the upstream discount is partially passed on to the retail price) as well as from the high quality level offered by the traditional retailer. Contrary to the conventional wisdom most of the consumer welfare gains seem due to the latter. The intuition for this result is that price competition softens substantially as a result of firms’ quality differentiation. We also investigate the effects of buyer market power on retail and wholesale prices as well as on producer welfare.buyer market power, vertical differentiation, Wal-Mart

Partial Implementation of COOL: Economic Effects in the U.S. Seafood Industry

Mandatory Country of Origin Labeling (MCOOL) was implemented on seafood in the United States on April 4, 2005. MCOOL exempts the foodservice sector and excludes processed seafood from labeling. This paper contributes to understanding the economics of the MCOOL law for seafood by showing that current partial implementation may have unintended consequences on the domestic supply chain. While labeling satisfies the market demand for information provision in one market, exemptions in the other market may create incentives for the diversion of imports, which are assumed to be lower in quality than domestic seafood, to the non-labeled sector. Analyzing alternate scenarios such as voluntary labeling shows that total welfare may be greatest under this scenario compared with partial MCOOL. Voluntary origin labeling of seafood by some U.S. retailers indicates there is no compelling market failure argument warranting partial MCOOL implementation. This work is therefore a step towards analyzing the effect of partial MCOOL policy in the seafood industry taking into consideration the nature of the industry.Country of origin labeling, product differentiation, information asymmetry, seafood

Market Power in Direct Marketing of Fresh Produce: Community Supported Agriculture Farms

CSA farms establish a loyal customer base and, potentially, market power. A new empirical industrial organization (NEIO) approach and survey data from Northeast CSA farms are used to determine whether CSA farms have market power and the extent to which they exercise their market power. Results suggest CSA farms exert about two percent of their potential monopoly power.Community Supported Agriculture; New Empirical Industrial Organization; Market Power; Fresh Produce; Organic Agriculture

The Effects of ITQ Management on Fishermen’s Welfare When the Processing Sector is Imperfectly Competitive

In this paper we use a general model of imperfect competition to predict welfare changes within an open-access fishery transitioning to individual transferable quota (ITQ) management. Although related research has explored the effects of market power in the harvesting sector on ITQ performance, none have considered the implications of an imperfectly competitive processing sector. This study addresses this question specifically in the context of the Atlantic herring fishery, although its implications are relevant to all fisheries with similar industry structure. Our results show that ITQs could have a negative impact on fishermen’s welfare when processors have market power and the cap on aggregate harvest is binding or becomes binding with the implementation of ITQs.ITQ, imperfect competition, welfare analysis, fisheries

Exploration de l'état de présence en tant qu'intérêt de recherche joignant l'aspect quotidien et l'aspect sacré dans une pratique artistique

Dans cette recherche en création je cherche à répondre à la problématique suivante: relativement à mon origine et mon parcours artistique, comment dans un geste de création contextualiser la forme géométrique dans des objets divers, afin de proposer un espace à la fois sacré et domestique lié au féminin ? Ceci correspond à ma première question de recherche. À partir de ce questionnement portant sur le domaine formel, on assiste à un glissement de la problématique vers la question fondamentale de cette recherche en création qui est comment est-il possible de vivre un état de présence à l'intérieur d'une pratique artistique quotidienne à la manière d'un rituel ? C'est à ces deux questions que je répondrai. Mon objectif de recherche est d'intégrer ma démarche artistique depuis mon intérieur qui est à la fois ma maison, mon quotidien, mon corps et mon esprit. En ce sens, je m'interroge sur l'espace féminin pour l'associer aux concepts de la corporéité et de la quotidienneté à travers la répétition de gestes du quotidien et de gestes de création prenant la forme de rituels personnels inventés. Ma pratique artistique prend un caractère sacré en s'inscrivant dans l'instant présent. Un travail lent, répétitif et méditatif de l'espace de création établissant une intimité avec l'oeuvre devenant un pseudosujet ou un objet-sujet dans le sens que René Passeron (1989) la perçoit, c'est-à-dire dans son inscription dans le temps présent, qualifie mon processus de création. Et c'est à l'intérieur d'une pratique artistique caractérisée par l'hybridité disciplinaire du dessin, de la vidéo et de l'art action que je cherche à répondre à ma problématique. La méthodologie utilisée est principalement de type heuristique, car elle est basée sur l'expérience et la solitude, à laquelle se joint la pratique de la méditation expérimentée tel un rituel pour effectuer le passage entre les activités quotidiennes et le travail en atelier. Peu à peu, ma pratique artistique s'ancre dans le corps en adoptant un processus méditatif qui est celui de porter mon attention sur ma respiration et d'observer mes sensations intérieures. C'est ainsi que je deviens témoin de mon processus de création. De manière parallèle, ma méthode de travail peut s'énoncer par une triade procédant dans l'ordre suivant: accumulation d'essais, sélection des découvertes et serialisation d'oeuvres. Les principaux résultats de cette recherche en création sont présentés en deux volets. D'abord dans le cadre d'une exposition regroupant des dessins et des vidéos présentés dans un centre d'artistes, puis par une action qui opère telle une performance dans un espace alternatif sur une période de trois semaines à l'instar de l'exposition. Il apparaît en conclusion de cette recherche que les dessins, les vidéos et la performance rejoignent de façon non préméditée le thème du féminin par son rapprochement aux travaux traditionnellement associés au féminin qui sont également liés au domaine domestique, tel que le tissage. De plus, mon processus de création fonctionne telle une tâche à réaliser. Aussi à travers cette recherche en création, s'exprime de manière sous-jacente le désir de faire apparaître les conditions favorables à l'émergence du flux qui est en corrélation avec une profonde concentration sur l'état présent. Ceci rejoint également mon aspiration à inclure dans ma pratique artistique une conscience du geste, un état de présence, un état de création, ou autrement dit, habiter mon geste par la conscience