STRUCTURE AND CONDUCT IN THE MARKET FOR NURSERY PRODUCTS IN GERMANY

In the past years, the market for nursery products in Germany has undergone fundamental changes.
There are structural changes and ongoing discussions concerning nurserymen’s methods in regard to price-policy.
This examination was done in order to ascertain if changes in handling the price formation system are casually related to the structural changes.
On basis of the transaction cost theory, hypotheses were formulated and tested by interviewing 23 representatives of the market in February 1994. To summarize, the nurserymen have institutionalized a price-list together with special rules in granting rebates.
During the expansion phase of the market, this price-system offered a realistic platform for orientation, and the list helped to reduce transaction costs.
Since becoming a buyer’s market, nurserymen have started to disregard their rules in rebating; whereas, the price-list itself is still in use for orientation.
Now, prices are mainly determined by the quantity available, and the list-prices are the starting point for a costly search by an increasing number of negotiations for the price, which will gain acceptance on the market.
This is one reason why transaction costs have increased.

Under these circumstances, the price-list is no longer able to serve as an instrument to reduce transaction costs.
If it should be replaced by an instrument which is able to operate as an orientation system for the price formation process, the listed prices have to be brought into line with the actual market position.
Consequently, setting up the price-list on grounds of production costs has to be replaced by monitoring the development of actual market prices.

Horticulture in Human life, Culture and Environment

E. Kaim

German market for nursery products, Market structures, Price-system, Transaction cost theory

https://doi.org/10.17660/ActaHortic.1995.391.12