Microeconomics of Agricultural Grading: Impacts on the Marketing Channel

David Hennessy

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: In this paper I focus on how grade prices affect the provision of product transformation skills in the food marketing system. A self-protection model is used to show how resources are allocated to protect the potential value of commodities in the marketing channel. Resource allocations may be complementary, and complementarity may be exploited to expand an industry. Further, uncertainty concerning skill levels may inhibit expansion. Because two primary objectives of agricultural extension involve facilitating skill acquisition and disseminating market information, the model confirms roles for extension personnel. The optimal location of transformation skills in a sequence of operations is also studied. Key words: grading, industry structure, multiple equilibria, quality, self-protection.

Date: 1995-11-01
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Published in American Journal of Agricultural Economics, November 1995, vol. 77 no. 4, pp. 980-989

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Related works:
Working Paper: Microeconomics of Agricultural Grading: Impacts on the Marketing Channel (1998)
Journal Article: Microeconomics of Agricultural Grading: Impacts on the Marketing Channel (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:5033

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