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on Marketing |
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Issue of 2007‒01‒28
three papers chosen by Joao Carlos Correia Leitao University of the Beira Interior |
| By: | Schroeter, John R. |
| Abstract: | Several empirical analyses of data from fed cattle markets have found a negative correlation between a region's weekly delivery volume of captive supply cattle and contemporaneous price in the local cash market. This negative correlation has been cited as evidence of a causal relationship between the two variables; a relationship in which buyers (beef packing plants) use captive supply procurement as an instrument to depress prices paid to cash market sellers (feeders). This paper investigates circumstances under which this empirical regularity might emerge as a benign artifact of buyer and seller behavior in a fed cattle market in which both sides are price takers. One feature of these markets is that sellers of both marketing agreement (the predominant captive supply procurement method) cattle and spot market cattle have some flexibility in scheduling delivery in order to take advantage of expected price changes. The effect that this type of inter-temporal arbitrage has on the dynamics of price and captive supply is investigated using simulation methods applied to a rational expectations model of delivery timing incentives. |
| Keywords: | cattle market, captive supply, extended path algorithm |
| JEL: | D4 Q1 |
| Date: | 2007–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12710&r=mkt |
| By: | Christopher L. Gilbert |
| Abstract: | Value chain analysis extends traditional supply chain analysis by locating values to each stage of the chain. This can result in a “cake division” fallacy in which value at one stage is seen as being at the expense of value at another. Over the past three decades, the coffee and cocoa industries have witnessed dramatic falls in the producer (i.e. farmer) share in rental price. Both industries are highly concentrated at the processing stage. Nevertheless, developments in the producer and retail markets are largely unconnected and there is no evidence the falls in the producer share are the result of exercise of monopoly-monopsony power. The explanation of declining producer shares is more straightforward – processing, marketing and distribution costs, incurred in consuming countries have tended to increase over time while production costs at the origin have declined. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpde:0605&r=mkt |
| By: | Hoppe, Heidrun C.; Moldovanu, Benny; Ozdenoren, Emre |
| Abstract: | We study two-sided markets with heterogeneous, privately informed agents who gain from being matched with better partners from the other side. Agents are matched through an intermediary. Our main results quantify the relative attractiveness of a coarse matching scheme consisting of two classes of agents on each side, in terms of matching surplus (output), the intermediary's revenue, and the agents' welfare (defined by the total surplus minus payments to the intermediary). In a nutshell, our philosophy is that, if the worst-case scenario under coarse matching is not too bad relative to what is achievable by more complex, finer schemes, a coarse matching scheme will turn out to be preferable once the various transaction costs associated with fine schemes are taken into account. Similarly, coarse matching schemes can be significantly better than completely random matching, requiring only a minimal amount of information. |
| Keywords: | Matching; Nonlinear Pricing |
| JEL: | C78 D42 D82 L15 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6041&r=mkt |