Abstract
Imperfect competition in the agricultural input procurement market is prevalent, especially at the local and regional scale. While there is much theoretical work on the positive effect of cooperatives on spatial competition, applied research is relatively scarce. We address the gap in the literature with an empirical study of cash prices in the Iowa corn market. With 589 observations from the 2018 harvest season, we construct a spatial model of price competition among grain handlers within a 20-mile radius. Among other findings, we conclude the ownership structure of Iowa grain handlers is important to explain the spatial dependence in corn cash prices. On average, cooperative grain handlers offer a lower corn cash price as compared to corporate grain handlers (¢1.20–1.72 per bushel), which is likely offset by refunds and dividends at the end of the fiscal year. At the same time, cooperative grain handlers force an adjustment in the behaviour and pricing strategy of nearby competitors. Cooperative grain handlers on average facilitate a significant increase of ¢0.65–2.08 per bushel in the corn cash price of competitors within a 5–17 mile radius. Our novel findings inform recommendations in terms of spatial entry and location decisions by cooperative grain handlers.
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Articles in the same Issue
- Invited papers
- The Economic Effects of COVID-19 on the Producers of Ethanol, Corn, Gasoline, and Oil
- COVID-19 and the US Lettuce Supply Chain: Implications for Farmworker Health and Safety and a Secure Supply
- Research Articles
- The GMO Pipeline, Import Bans and Asynchronous Approvals – The Impact on Agricultural Trade
- The Competitive Impact of Cooperatives on the Spot Market: A Spatial Analysis of Iowa Corn Prices
- The Determinants of the EU Import Demand for Soybean and Maize: What Role for GMOs?
- Environmental Performance of Food and Beverage Firms in Merger and Acquisition Deals
- Regular Price Stickiness in German Food Retailing
- The Influence of Online Reviews on Restaurants: The Roles of Review Valence, Platform, and Credibility
- Collective Reputation and Quality in Online Platforms
- What Factors Influence Consumer Preferences for Search and Credence Seafood Characteristics? an Empirical Analysis in Kentucky and South Carolina
- Review
- Hedonic Price Functions and Wine Price Determinants: A Review of Empirical Research
Articles in the same Issue
- Invited papers
- The Economic Effects of COVID-19 on the Producers of Ethanol, Corn, Gasoline, and Oil
- COVID-19 and the US Lettuce Supply Chain: Implications for Farmworker Health and Safety and a Secure Supply
- Research Articles
- The GMO Pipeline, Import Bans and Asynchronous Approvals – The Impact on Agricultural Trade
- The Competitive Impact of Cooperatives on the Spot Market: A Spatial Analysis of Iowa Corn Prices
- The Determinants of the EU Import Demand for Soybean and Maize: What Role for GMOs?
- Environmental Performance of Food and Beverage Firms in Merger and Acquisition Deals
- Regular Price Stickiness in German Food Retailing
- The Influence of Online Reviews on Restaurants: The Roles of Review Valence, Platform, and Credibility
- Collective Reputation and Quality in Online Platforms
- What Factors Influence Consumer Preferences for Search and Credence Seafood Characteristics? an Empirical Analysis in Kentucky and South Carolina
- Review
- Hedonic Price Functions and Wine Price Determinants: A Review of Empirical Research