Resumen de Market power behavioural dynamics and price volatility in agricultural markets

Ana Felis Rota, Alberto Garrido Colmenero

• Market power in value chains of agricultural products is often unbalanced.

  Agricultural markets have been more volatile since the food crisis in 2007-2008.

  Markets instability should be taken into account when studying agrifood markets structure. We unravel the dynamics of market power (MP) within the agri-value chain through an innovative approach that mixes competition, industrial organisation (IO) and finance methods. We analyse the weekly prices of fifteen fruits and vegetables at three chain positions in Spain. We construct MP measures along the value chain and apply a DCC-MGARCH model. This new technique reveals how MP is conditioned by changes in prices in the value chain, revealing dynamic interactions amongst mark-ups. This affords an evaluation on the degree of collusion between market players, overcoming traditional limitations regarding static IO analyses. We find a strong role of wholesalers in the distribution chain, even greater in a dynamic context.

  Perishable fruits and vegetables markets are sensitive to external shocks and volatility processes, which translates into MP.