Three Essays On The Economics Of Vertical And Spatial Relationships In Specialty Crop Supply Chains: Co2 Emission Policies, Price Transmission And Market Power

Abstract

This dissertation offers three essays addressing critical topics in supply chains for specialty crops: 1) impacts of initiatives to control CO2 emissions; 2) vertical price transmission behavioral changes after elimination of an export cartel; and 3) influence of market power on cost passthrough. Chapter 1 investigates the impact of alternative CO2 emission reduction policies, namely a carbon tax and a cap-and-trade system, on the U.S. apple supply chain. The potential benefits accruing to farm-level CO2 sequestration options are also considered. A temporally- and spatially-disaggregated price equilibrium model is constructed to evaluate the relationship between CO2 emissions reduction and region- and sector-wide economic performance. The results indicate that all CO2 emission policies examined lead to modest decreases in CO2 emissions from the apple supply chain, with implied carbon prices ranging between $25 and $200 per metric ton of CO2. The results also suggest that a cap-and-trade system may be more cost-effective in reducing CO2 emissions than a carbon tax, regardless of the CO2 sequestration options utilized. Chapter 2 examines the impact of terminating the coffee export quota system (EQS) on international-to-retail price transmissions in France, Germany and the United States. A threshold error correction model (TECM) is developed to measure price transmission behaviors, taking into account long-run threshold effects and short-run price transmission asymmetries (PTA). The results suggest that retail prices become more responsive to changes in international prices after the EQS elimination. The evidence suggests the presence of short-run PTAs, with significant differences across countries. We discuss these differences in terms of market structure. Chapter 3 investigates links between exertion of market power and cost pass-through patterns in roasted coffee markets in the U.S. and Germany. A structural supply-demand model is developed to evaluate the degree of market power exerted by the roasting industry. Subsequently, a TECM is used to test the impacts of market power on cost pass-through behaviors. The results indicate that market power drives the existence of a "rockets and feathers" phenomenon in both countries. That is, market power causes retail prices to rise faster than they fall in response to changes in international prices.