UC Davis Agricultural and Resource Economics

ARE Distinguished Professor Richard J. Sexton and Coauthor Win EAAE Research Discovery Award

Sept. 5, 2023

ARE Distinguished Professor Richard J. Sexton and his colleague Thomas Kopp, from the University of Siegen in Germany, won the European Association of Agricultural Economists (EAAE) Research Discovery Award for 2021 for their paper "Farmers, Traders, and Processors: Buyer Market Power and Double Marginalization in Indonesia,” published in the American Journal of Agricultural Economics 103(2) (2021), pages 543–568. The award was presented at the close of the 2023 EAAE triennial meeting in Rennes, France on September 1, 2023.

Although market conditions in developing countries are often conducive to the exercise of buyer market power by intermediaries such as traders and processors, few empirical estimates of the magnitude of buyer power are available. Kopp and Sexton develop a model of buyer power exercised at successive stages of the supply chain, a condition known in the literature as “double marginalization.” They show that traders may exercise buyer power over rubber producers and, in turn, rubber processors in Indonesia may exercise buyer power over the traders. The authors estimate the magnitude of this market power and its impacts on farm prices and economic welfare.

Read the full article here.


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