Articles
SUPPLY AND PRICE CONTROL BY PRODUCER GROUPS ON THE EARLY POTATO MARKET IN WESTERN GERMANY: A QUADRATIC PROGRAMMING APPROACH TO OPTIMAL COLLECTIVE MARKET STRATEGIES AND THE FREE RIDER PROBLEM
Article number
77_27
Pages
255 – 266
Language
English
Abstract
An interregional and intertemporal quadratic Programming Model was constructed, to quantify the effects of Supply and Price Control by Producer Groups on the Early Potato Market in West Germany.
The model calculations show, that the main advantage of supply control is going to the unorganized producer and not to the producer groups.
The propensity to take the more profitable free rider position seems to be very high, thus explaining the observation that producers tend to break out of the price and quota cartel.
For this reason supply control will only be effective, if the producer groups control a very high market share.
Nevertheless the minimum price system improves the market transparence of the producers reducing the information advantage of the traders.
The model calculations show, that the main advantage of supply control is going to the unorganized producer and not to the producer groups.
The propensity to take the more profitable free rider position seems to be very high, thus explaining the observation that producers tend to break out of the price and quota cartel.
For this reason supply control will only be effective, if the producer groups control a very high market share.
Nevertheless the minimum price system improves the market transparence of the producers reducing the information advantage of the traders.
Publication
Authors
H.M. Blumencron, R.V. Alvensleben
Keywords
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