Imperfect Competition in Agricultural Processing and Distributing Industries
In: Canadian journal of economics and political science: the journal of the Canadian Political Science Association = Revue canadienne d'économique et de science politique, Band 10, Heft 2, S. 150-164
Among persons unfamiliar with agricultural markets, it is not uncommonly assumed that here, if in no other area of economic activity, prices are established through the free play of competitive forces in an environment at least approaching the perfect market. To be sure, agricultural production is carried on by atomistic units and, at least prior to the inauguration of government crop-control programmes, there have been few limitations upon competition among farmers for the use of productive resources. And, in the processing and distribution of farm products, the illusion of pure competition has been strengthened by the relatively large number of firms and the fact that they frequently do not have direct control of the short-run supply of their raw material.But those who are familiar with actual conditions in these markets know how unrealistic it may be to proceed on the assumption of pure competition. It has become increasingly evident to the agricultural economist, for example, that typically—even where the number of processing firms is large—a few firms dominate a given industry, often aided and abetted by active trade associations. Again, in the local market, where assembling and processing is done by a relatively large number of small independent agencies, differentiation of services—including that of location—may lead to non-aggressive buying policies. Finally, the fact that processor-distributors do not control the short-run supply of farm products does not preclude monopoly elements. For imperfect competition in a processing-distributing industry implies control of the supply of processing-distributing services, hence the price of these services (the margin or spread).
