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Imperfect Competition in Agricultural Processing and Distributing Industries*
Published online by Cambridge University Press: 07 November 2014
Extract
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).
- Type
- Articles
- Information
- Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 10 , Issue 2 , May 1944 , pp. 150 - 164
- Copyright
- Copyright © Canadian Political Science Association 1944
Footnotes
*
Journal Article No. J-1193 of the Iowa Agricultural Experiment Station, Ames, Iowa, Project 595.
Also a lecture delivered at the University of Toronto, March 2, 1944. While the material here presented has already been published by the author in various channels elsewhere, it is summarized here in convenient form for the Canadian reader. Papers which have appeared in the Journal of Farm Economics, Journal of Political Economy, Quarterly Journal of Economics, and Research Bulletin series of the Iowa Agricultural Experiment Station have been drawn on freely and are referred to at appropriate places for the reader desirous of additional details. Furthermore, most of this material has been brought together in the author's recent book, Imperfect Competition Within Agricultural Industries (Ames, Iowa, Iowa State College Press, 1941), where general economic analysis has been adapted to the peculiar problems faced by the specialist in agricultural marketing and prices. Page references to this book (hereinafter abbreviated as Imperfect Competition) may be helpful to those who are interested in the theoretical tools applied here.
References
1 See the author's article, “Market Sharing in the Packing Industry” (Journal of Farm Economics, vol. XXII, 02, 1940, pp. 225–40)Google Scholar; and his Imperfect Competition, pp. 3-6 and 120-30.
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3 United States House of Representatives, Committee on Agriculture, 66th Congress, 2nd Session, Hearings on Meat-Packer Legislation, 1920, p. 2089.Google Scholar Note how accurately this differentiates a dominant buyer from a small competitive buyer.
4 Ibid., p. 1179. Statement of Dr. L. D. H. Weld.
5 Putnam, George E., Supplying Britain's Meat (London, 1923), pp. 124–6Google Scholar (italics added). Cf. Hanson, Simon G., Argentine Meat and the British Market (Stanford University Press, 1938).Google Scholar
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22 From an unpublished manuscript by Albert Mighell.
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