On the Existence and uniqueness of Price Equilibrium with Multi-Store Firms

The paper gives a proof of the existence and the uniqueness of price equilibrium in a multi-product, multi-firm competition framework. It illustrates how the price levels depends on the inter-brand portfolio substitution and on the intra-brand portfolio substitution

On Coalition Formation with Heterogeneous Agents

We propose a framework to analyze coalition formation with heterogeneous agents. Existing literature defines stability conditions that do not ensure that, once an agent decides to sign an agreement, the enlarged coalition is feasible. Defining the concepts of refraction and exchanging, we set up conditions of existence and enlargement of a coalition with heterogeneous agents. We use the concept of exchanging agents to give necessary conditions for internal stability and show that refraction is a sufficient condition for the failure of an enlargement of the coalition. With heterogeneous agents we can get a situation where a group of members of an unstable coalition does not deviate, neither within the coalition nor within the extended coalition. Hence, the possibilities of agreement are richer than in the standard analysis with homogeneous agents. Examples of industrial economics are used for illustration, and an application to climate change negotiations is discussed in more detail.Heterogeneity, Coalition, Exchanging, Refraction, Global Externalities

Heterogeneity, climate change and stability of international fiscal harmonization

This paper analyses harmonization on fuel taxes between two coalitions. Harmonization is considered as a tool to mitigate greenhouse gas emissions, and reduce environmental costs. Domestic fuel producers can sell abroad, and their profits influence national governments in the negotiations. If all countries are identical, harmonization is environmental friendly provided environmental marginal damages are high. It is also economically profitable, but may be unstable if one of the coalitions is small enough. In this case, however, financial transfers between coalitions can stabilize harmonization. Nevertheless, countries can be heterogeneous with respect to the existence of a domestic producer. Heterogeneity introduces a new instability: not only the size, but also the composition of coalitions matters. Furthermore, the level of environmental damages also influences the stability of harmonization. In this case, intra- and inter-coalition financial transfers are necessary but not sufficient to stabilize harmonization

Minimum Quality Standards and brand development in agrifood chains

This paper develops an original framework to better understand the interaction between the development of brands and the quality of raw materials. We consider different levels of consumer trust for a brand and we examine the incentive for firms to improve the quality of a processed product by requiring that upstream suppliers adopt a private standard. In contrast to previous literature, the incentive for firms to develop a more stringent private standard may increase with the level of the regulated minimum quality standard. Moreover, the creation of a private standard can reduce the risk of consumer dissatisfaction while increasing the marketed quantity. Unexpected positive effects of a reinforcement of the minimum quality standard may arise, in the sense that both market access for upstream producers and consumer surplus are improved and final price may decrease with respect to simply complying with the regulation.Minimum Quality Standard, brand, vertical relationship, Agribusiness,

Agrifood safety standards, market power and consumer misperceptions

This paper analyzes how the implementation of a food safety standard affects firms strategic behaviour within the context of a food chain. We provide a formal analysis, which considers that the sanitary risk results from a strong heterogeneity of upstream production conditions and the final demand depends on consumers risk estimations (given that consumers may underestimate or, conversely, overestimate the sanitary risk). We show how downstream (processing or retailing) firms may be prompted to play a positive role with respect to food safety, either by selecting only the safest upstream producers or by encouraging the improvement of suppliers production conditions. When the degree of consumers risk misperception is relatively low, then a downstream firm may adopt the latter strategy and increase the marketed quantities as the food safety standard is improved. However, we show that the actual contamination risk is not necessarily decreasing in the level of the food safety standard.food safety standards, market power, risk misperception, Food Consumption/Nutrition/Food Safety,

Effects of category management on producer-retailer relationships

The relationships between retailers and producers are considered for understanding the determinants of quality, variety and prices. In the food sector, some issues have been extensively studied: impacts of private labels, supply contracts, price transmission. Despite an increasing role, the implementation of “Category management” (CM) has been less studied. CM belongs to a set of methods based on the concepts of Efficient Consumer Response and Supply Chain Management which have been widely implemented by large retailers and thus have changed the relationships among actors in the food chain. As a part of this evolution, Category Captain’s concept (CC) involves a commitment between a retailer and one of the suppliers who receives decision-making power over the product category. Usually, the major of the food suppliers plays the CC’s role in partnership with the retailers. In practices, CC raises many questions. What effects on the sales and prices? Is it beneficial for all the stakeholders, including the consumers? What are their consequences on the non captain suppliers? We propose a vertical relationship model considering that the retailer is the chain’s leader (Stackelberg game). We compare a non-cooperative game (no CC) to a cooperative game (one supplier as CC). We analyse under which conditions CC improves the profit of each stakeholder, as well as the consumers’ surplus. We show that the cooperative game is always a “win, win, win” game for stakeholders (but not necessary for consumers) if the two suppliers offer similar products. If products are different, we define the parameters relationships under which CC is beneficial for stakeholders and consumers.Category captain, shelf space allocation, game theory, Stackelberg equilibrium., Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety,

Retailer-led Regulation of Food Safety : Back to Spot Markets?

At the end of the 1990s European retailers had significantly contributed to restructuring fresh agricultural product food chains (meat, fruit and vegetables), and had turned away from spot markets in order to create their own supply chains, based on private technical requirements and verification systems usually managed from within the firm. However, over the last few years a second type of system has appeared, as the range of standards adopted by retailers has been broadened to include generic standards common to several retailers. A telling example of this new approach is provided by the EUREPGAP protocol. In this paper we propose a theoretical analysis of this new procedure and its possible impacts.food safety, spot markets, retailer, supply chain, Food Consumption/Nutrition/Food Safety,

Stakeholder perception of EU food safety governance: the case of EU fruit and vegetable imports from Southern Mediterranean Countries

Despite the advantages ensuing from preferential market access agreements, trade exchanges between Southern Mediterranean Countries (SMCs) and the EU are often hindered by food safety issues. These are particularly relevant for fruit and vegetables, which are subject to heterogeneous regulations in SMCs. This paper seeks to outline governance solutions to improve ex-ante compliance capacity of SMCs produc-tion and to enhance integration with the EU market. A set of research hypotheses, concerning the difficul-ties and benefits related with food safety compliance, are formulated. These hypotheses are then discussed in the light of the empirical evidence gathered from (i) public bodies involved in food safety enforcement and (ii) a direct survey conducted on 37 stakeholders in the fruit and vegetable supply chain in Italy. The main problems identified relate to the scarce harmonization among control systems in EU Member States and insufficient checks in exporting countries. The main benefits include the reduction of sanitary risk and the reinforcement of long-term trust-based relations along the supply chain. The most promising strategies encompass the improvement of inspections on production sites and of infrastructures in the countries of origin. Further areas of intervention concern the harmonization of food safety regulation between EU countries and SMCs and the development of bilateral cooperation and technical training programs

Explaining the Emergence of Private Standards in Food Supply Chains

This paper provides an original theoretical framework to better understand the raise of private standards in agrifood chains. Reasons for the emergence and conditions for the effectiveness of private standards are identified, by investigating retailers' strategic behaviour and, more precisely, both interactions among retailers and upstream producers and the role of consumer behaviour vis-àvis the food safety risk. We show that a relatively strict Minimum Quality Standard (MQS) may incentive the retailer to develop an even more demanding private standard, when market-driven incentive is relatively high; this result crucially depends on consumer risk misperception. Setting a private standard may improve market access for upstream producers. In addition, it may reduce food safety risk and, at the same time, improve consumer surplus

Coalition Stability with Heterogeneous Agents

We analyze coalition formation with heterogeneous agents based on an individual stability concept. Defining exchanging and refractory agents, we give existence and enlargement conditions for coalitions with heterogeneous agents. Using the concept of exchanging agents we give necessary conditions for internal stability and show that refraction is a sufficient condition for the failure of an enlargement of the coalition.Heterogeneity, Coalition, Exchanging, Refraction.