Producer Heterogeneity and Voting Power in Mandatory U.S. Agricultural Marketing Organizations

• Agricultural Economics Workshop

Date and Location

Tuesday, September 29, 2015, 4:10 PM - 5:30 PM
ARE Conference Room, 2102 Social Sciences and Humanities

Abstract

We consider how cost heterogeneity and market power affect voting power in producer referenda for mandatory agricultural marketing organizations with generic promotion programs in the United States. We measure voting power using the Banzhaf Power Index and propose a new version of this index based on the profit-maximizing theory of the firm that provides an improved estimate of voting power. Examining several types of demand shifts and voting rules, we find that both Banzhaf Power and our new measure vary considerably depending on the market structure and level of cost heterogeneity.