A Single-Product "Dual-Structure" Spatial Imperfect Competition Equilibrium Model and Its Application to the Japanese Milk Market

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  • Kawaguchi Tsunemasa
    Seminar of Econometric Analysis in Agriculture, Faculty of Agriculture Kyushu University
  • Suzuki Nobuhiro
    Seminar of Econometric Analysis in Agriculture, Faculty of Agriculture Kyushu University

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  • 一生産物の二重構造不完全競争空間均衡モデルとその生乳市場分析への適用について
  • 一生産物の2重構造不完全競争空間均衡モデルとその生乳市場分析への適用について
  • 1セイサンブツ ノ 2ジュウ コウゾウ フカンゼン キョウソウ クウカン キ

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Abstract

The traditional single-product spatial equilibrium model assumes either perfect competition or monopoly. In this paper, based on Hashimoto's work (1984, 1985), a new, generalized single-product “dual-structure” spatial imperfect competition equilibrium model is developed which includes both perfect competition and monopoly as the two extremes. The model incorporates the “dual structure” in which there are oligopolistic consignment sellers (cooperatives) and perfectly competitive many producers (farmers) with pooled returns given. Using the model, we can easily solve many spatial equilibrium problems with imperfect competition which Harker and others modeled in a very complicated way which utilizes the variational inequality model. The usefulness of the model is also demonstrated by the case study of the Kyushu regional milk market in Japan. The model can easily incorporate both fluid and manufacturing milk markets, and in addition the manufacturing milk market can be easily divided in the model into the market within payment quotas and the over-payment-quota market. We show many spatial equilibrium solutions in the Kyushu milk market, assuming many sets of imperfectly competitive behavior with the “dual structure”. It is proved that the current complicated interregional milk movements can be well explained by assuming some imperfectly competitive behavior. The model also provides spatial equilibrium solutions for perfectly competitive milk movements and monopoly milk allocations with the “dual structure”, which never have been solved before. These solutions will be very useful for analyzing alternative milk marketing organization policies in detail.

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