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GTAP Resources: Resource Display

GTAP Resource #7268

"Spatial Competition and Market Power in China’s Agricultural Markets"
by Ai, Jianwei, Jiansuo Pei and Anton Yang

How does market power impact farmer well-being in agricultural value chains? How does the role of intermediaries shape the implications of competition in agricultural markets? This paper examines the effects of China's grain distribution market integration and spatial competition among intermediaries on farmers' welfare and technology adoption. We introduce a novel approach to measuring competition in agricultural markets, using geographic coordinates and remote sensing data to define market scope. We then exploit a major policy promoting the integration and competition of the domestic agricultural market--a quasi-natural experiment--to provide causal evidence of the positive impact of pro-competitive policies on agricultural production and the welfare of farmers. We provide reduced-form evidence that increasing spatial competition by one standard deviation results in a 6 log-point increase in the prices received by farmers. To assess the aggregate impact of the policy, we develop a structural model incorporating a micro-founded Nash bargaining process involving middlemen in the domestic grain trade. Our model suggests that reducing domestic trade costs by 10% would increase farmers' income also by 10% through intermediary competition, technology adoption, and improved agricultural productivity.

Resource Details (Export Citation) GTAP Keywords
Category: 2024 Conference Paper
Status: Not published
By/In: Presented during the 27th Annual Conference on Global Economic Analysis (Fort Collins, Colorado, USA)
Date: 2024
Created: Ai, J. (4/14/2024)
Updated: Yang, A. (5/29/2024)
Visits: 126
- Economic analysis of poverty
- Economic development
- Infrastructure
- Bridging CGE and new quantitative trade (NQT) literature
- Economic geography

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