Abstract
Agricultural economists have a long history of emphasizing and analyzing the spatial dimension of agricultural and food markets. Despite a rich body of literature and important contributions to agricultural and spatial economics, one aspect is frequently disregarded: the oligopsonistic nature of agricultural markets due to spatial competition of neighboring buyers of farm products. This review presents the theoretical foundations of spatial pricing, competition, and location in terms of buyer power and discusses concepts that are relevant for agricultural markets. By providing a comprehensive overview of prior work, we highlight the multifaceted areas of applications to agricultural markets. Additionally, we discuss future research avenues for and challenges of the analysis of spatial competition in agricultural economics.
Highlights
The spatial distribution of farming is an essential feature of agricultural production and, ever since the pioneering work of von Thünen (1826), a topic at the core of agricultural economics
There is a rich body of literature in agricultural economics that considers the spatial dimension of agricultural markets, one important implication of the features described above remains underexamined: Agricultural markets are often oligopsonistic markets because buyers of farm products compete with only a few close neighbors (Faminow & Benson 1990)
The first aim of this review is to present and promote spatial economics concepts and models that are relevant for applications to agricultural markets
Summary
Spatial competition, buyer market power, spatial price discrimination, spatial differentiation
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