Identifying market power of retailers and processors: Evidence from coffee supply chain in India

Abstract

This paper deals with the dynamics of market power with processors and retailers in the coffee supply chain in India. We develop an imperfect competition model that allows for the potential oligopoly and/or oligopsony power of retailers and processors with respect to adjacent stakeholders in the supply chain. We also empirically determine the presence/absence of market power among processors and retailers in the coffee supply chain in India. This paper highlights the existence of market power with processors in the coffee industry that plays an important role in the imperfect price transmission and should not be ignored when developing regulatory policies.

Keywords

• Market power
• Price transmission
• Processors
• Retailers
• Coffee supply chain