Vertical Market Research Articles

Price Fluctuation and Vertical Market Integration of Shallots in The Production Center of Central Java Indonesia

Shallots from Brebes production center are not only distributed in that region but also to all regions in Indonesia, including Beringharjo market in Yogyakarta. Therefore, this study aims (1) to analyze price fluctuations of shallots in producer and consumer markets in Brebes and Beringharjo Yogyakarta; (2) to analyze vertical market integration in Brebes and producer markets in Brebes with consumer market in Beringharjo. The data used is weekly price of shallots in producer and consumer markets in Brebes, as well as in Beringharjo during 2015-2019. Data were analyzed using the Engle Granger cointegration model. The results showed that the price of shallots in producer and consumer markets tends to fluctuate and has the same pattern of movement. Shallot price fluctuations in producer market in Brebes are higher than consumer market in Brebes and Beringharjo Yogyakarta [9]. Shallot price fluctuations between the three markets were highest in January, February and December and lowest in May and November. In the short and long term, there is weak integration between the producer market and consumer market in Brebes. In the short term there is no integration between the producer market in Brebes and consumer market in Beringharjo Yogyakarta, but in the long term there is weak market integration.

Price Integration in Wholesale Maize Markets in Pakistan

Continuing debate concerning the appropriate role of the government in the marketplace and the necessity to some how estimate the effects of agricultural policies on agricultural markets have forced researchers to develop various methods, which would enable them to analyse market efficiency. Government intervention in setting prices, incomes and markets is always controversial. For economists, government intervention may be justified if it does not enhance distortions into the market and, moreover, remedies the existing market imperfections. But how can one observe whether the policy proves to improve market functioning or results in even more inefficiency? One way to throw some light on this long-standing issue is to analyse market performance by studying market integration. Three types of market integration are identified in the literature, which are intertemporal, vertical and spatial. Inter-temporal market integration relates to the arbitrage process across periods. Vertical market integration is concerned with stages in marketing and processing channels. Spatial integration is concerned with the integration of spatially distinct markets i.e. if price changes in one market are fully reflected in alternative market then these markets are said to be spatially integrated. The concept of market integration has normally been applied in studies involving spatial market interrelatedness.

Vertical Market Integration and Behavioral Variations of Medium-Quality Rice Prices Before and During Covid-19

The Covid-19 pandemic has put pressure on the prices of food, particularly rice, a strategic commodity for trade across Indonesia. The traditional market and wholesalers face intense price competition for rice, which renders the market ineffective. This study proves the form of rice market integration in wholesalers and traditional markets, as well as the behavior of pricing both before and after the pandemic. The research data are the weekly and monthly prices from the Indonesian National Strategic Food Price Information Center Institute for the years 2018 to 2021. Vector autoregression (VAR) and error correction model (ECM) were adopted for the integration analysis. The results suggest that prices in traditional markets and wholesalers cointegrate, but this does not persist over time. Equilibrium prices in both markets were reached after 4 months. The price trend demonstrates that price changes in both markets before and during the epidemic are not symmetric. Price changes during the Covid-19 epidemic were erratic and dramatic. Government involvement through suitable policies is required in a market environment under intense pressure to stabilize prices. Market participants must accept this policy in order to prevent any party from gaining an undue advantage.

Who is more aggressive under vertical product differentiation?

In this paper, we introduce quality differences in vertical market and compare the managerial delegation contracts of downstream firms. We find that the owner of a downstream firm that produces low‐quality products induces the manager to behave more aggressively when the marginal cost coefficient is low. While when marginal cost coefficient is high, the owner of a downstream firm that produces high‐quality products induces the manager to behave more aggressively. It is further found that managerial delegation can improve the profits of downstream firms but reduce the consumer surplus and social welfare.

Classifying Beers With Memristor Neural Network Algorithm in a Portable Electronic Nose System

Quality control and counterfeit product detection have become exceedingly important due to the vertical market of beers in the global economy. China is the largest producer of beer globally and has a massive problem with counterfeit alcoholic beverages. In this research, a modular electronic nose system with 4 MOS gas sensors was designed for collecting the models from four different brands of Chinese beers. A sample delivery subsystem was fabricated to inject and clean the samples. A software-based data acquisition subsystem was programmed to record the time-dependent chemical responses in 28 different models. A back-propagation neural network based on a memristor was proposed to classify the quality of the beers. Data collected from the electronic nose system were then used to train, validate, and test the created memristor back-propagation neural network model. Over 70 tests with changes in the setup parameters, feature extraction methods, and neural network parameters were performed to analyze the classification performance of the electronic nose hardware and neural network. Samples collected from 28 experiments showed a deviation of 9% from the mean value. The memristor back-propagation network was able to classify four brands of Chinese beers, with 88.3% of classification accuracy. Because the memristor neural network algorithm is easy to fabricate in hardware, it is reasonable to design an instrument with low cost and high accuracy in the near future.

Upstream SOEs in the mixed-ownership reform

This article explores possible options of the upstream mixed-ownership reform with imperfect substitute products in a vertically related market composed of one upstream SOE and two downstream profit-maximising retailers. Its focus is not only on incorporating the issue of privatisation into a vertical market structure, but also on extending the traditional upstream–downstream competition model by allowing the active contribution of retailers to enhance values at different costs. It finds that in a vertically related market where retailers’ effort matters, the socially optimal policy towards the upstream SOE is partial privatisation regardless what product differentiation is involved, but the specific degree of privatisation is negatively correlated to the level of effort costs. By contrast, in a vertically related market without retailers’ effort, the government tends to choose full nationalisation of the firm.

Downstream Cross‐Holdings and Upstream R&D*

Cross‐holdings affect firms’ behavior in other vertically related markets. We consider a vertical market with two downstream firms and an upstream firm engaging in cost‐reducing R&D. Since downstream cross‐holdings weaken downstream competition, the upstream firm also decreases its investment. Hence, we find that as the degree of downstream cross‐holdings increases, input price increases and investment level decreases. Although cross‐holdings have this negative effect on downstream firms’ profits, they increase the downstream firms’ profits if the investment technology is inefficient. Finally, we show that with inefficient upstream investment, total surplus increases with cross‐holdings, while consumer surplus always decreases with cross‐holdings.

Criticizing apartment ownership regulation in Indonesia

Housing is a basic necessity, yet land availability is limited. This phenomenon urges residents to resort to vertical living and developers to provide vertical housing. The escalation of the vertical housing market has raised potential issues, particularly the use of strata titles in commercial properties advertisement. Strata title is proof of apartment unit ownership which has been widely recognized in the common law system. Meanwhile, Indonesia as a country that adheres to the civil law system regulates apartment ownership based on SHMSRS or Certificate of Apartment Ownership. This practice will result in legal consequences in the ownership status. Hence, this research is carried out by comparing the concept of strata title in the civil law and common law legal systems through a normative juridical methodology based on a statutory and conceptual approach. This study strives to differ strata title and SHMSRS concept to provide a comprehensive knowledge of apartment ownership and prevent legal problems from surfacing in the future.

The Heterogeneous Tax Pass-Through Under Different Vertical Relationships

Abstract A large body of literature has examined the impact of the horizontal market structure on the tax incidence on consumers. However, the extent to which the vertical market structure affects the tax pass-through—which might be particularly relevant in the presence of the double marginalisation problem—is an unexplored question. Using a confidential dataset of gas station contracts with a major Spanish refiner, in combination with their retail fuel prices and characteristics, we document that the pass-through of a tax on prices is about 38% higher in vertically integrated gas stations than in independent ones. Our estimates allow us to assess the impact on government revenue and emissions under different counterfactual market scenarios.

Who Searches for Whom: The Role of Search Costs in a Vertical Market

Who Searches for Whom: The Role of Search Costs in a Vertical Market

Countervailing Power in a Vertical Market Experiment

Countervailing Power in a Vertical Market Experiment

A Study of 5G Edge-Central Core Network Split Options

With the wide adoption of edge compute infrastructures, an opportunity has arisen to deploy part of the functionality at the edge of the network to enable a localized connectivity service. This development is also supported by the adoption of “on-premises” local 5G networks addressing the needs of different vertical industries and by new standardized infrastructure services such as Mobile Edge Computing (MEC). This article introduces a comprehensive set of deployment options for the 5G network and its network management, complementing MEC with the connectivity service and addressing different classes of use cases and applications. We have also practically implemented and tested the newly introduced options in the form of slices within a standard-based testbed. Our performed validation proved their feasibility and gave a realistic perspective on their impact. The qualitative assessment of the connectivity service gives a comprehensive overview on which solution would be viable to be deployed for each vertical market and for each large-scale operator situation, making a step forward towards automated distributed 5G deployments.

A Multi-Agent Reinforcement Learning Approach for Capacity Sharing in Multi-Tenant Scenarios

5G is envisioned to simultaneously provide diverse service types with heterogeneous needs under very different application scenarios and business models. Therefore, network slicing is included as a key feature of the 5G architecture to allow sharing a common infrastructure among different tenants, such as mobile communication providers, vertical market players, etc. In order to provide the Radio Access Network (RAN) with network slicing capabilities, mechanisms that efficiently distribute the available capacity among the different tenants while satisfying their needs are required. For this purpose, this paper proposes a multi-agent reinforcement learning approach for RAN capacity sharing. It makes use of the Deep Q-Network algorithm in a way that each agent is associated to a different tenant and learns the capacity to be provided to this tenant in each cell while ensuring that the service level agreements are satisfied and that the available radio resources are efficiently used. The consideration of multiple agents contributes to a better scalability and higher learning speed in comparison to single-agent approaches. In this respect, results show that the policy learnt by the agent of one tenant can be generalised and directly applied by other agents, thus reducing the complexity of the training and making the proposed solution easily scalable, e.g., to add new tenants in the system. The proposed approach is well aligned with the on-going 3GPP standardization work and guidelines for the parametrization of the solution are provided, thus enforcing its practical applicability.

Monopolistic third-degree price discrimination, welfare, and vertical market structure

Monopolistic third-degree price discrimination, welfare, and vertical market structure

Competitive Harm from Vertical Mergers

The antitrust enforcement Agencies’ 2020 Vertical Merger Guidelines (VMGs) introduce a nontechnical application of bargaining theory into the competitive assessment of vertical acquisitions. This bargaining theory has much in common with the theory of unilateral effects that is applied to horizontal mergers. The VMGs focus on post-merger price increases requires consideration of a vertical merger’s role in eliminating double marginalization (EDM). The problem occurs when two bargaining firms both have market power but are unable to coordinate their output. Assessing EDM bundles two themes that Ronald Coase developed in his two most well-known articles: “The Nature of the Firm” and “The Problem of Social Cost”. The first argued that the boundaries of a firm are determined by the firm’s continuous search to minimize costs. The second argued that two traders in a well-functioning market will achieve the joint-maximizing solution. Anti-interventionists rely heavily on Coasean arguments that unless high transaction costs get in the way firms will bargain to joint maximizing results. If that is true, then double marginalization will rarely provide a defense to a vertical merger. The law of vertical mergers deals largely with firms that transact with one another routinely, in legally enforceable buy-sell relationships. In a well-functioning vertical market durable double marginalization should be rare.

Analysis of Vertical Market Integration for Rice Commodities between Serdang Bedagai Regency and Medan City

Rice is the main commodity food for Indonesian people. The majority of Indonesian people consume it on daily basis. Due to this reason, Rice has a strategic value not only to live the life of society but also to be used as a parameter of the country's economic and social stability. If the scarcity or unmet need for rice happens, it will have an impact on inflation and social turmoil. The purpose of this study was to analyze and analyze the integration of the rice market in the short and long term between the Serdang Bedagai regency and Medan city. The data used in this study is secondary data using monthly time series data from January 2014 to December 2018. Timmer's Index of Market Connection Coefficient Analysis Method is used as the analytical method to measure the short-term and long-term market integration. This index was developed by Timmer (1987). The results showed that the market integration level of wholesale rice prices in the short term between the Serdang Bedagai regency and Medan city was low with an IMC value of 1.985> 1. There is long-term integration between the markets of the Serdang Bedagai regency and Medan city wholesalers with a coefficient value of b2 of 0.713> 0. The level of market integration in the short term between the Serdang Bedagai regency and Medan city retail rice price is low with an IMC value of 2.243> 1. There is long-term integration between the market of the Serdang Bedagai regency and Medan city retail with a coefficient of b2 of 0.463> 0. Keywords: Market Integration, Rice, Index of Market Connection.

Vertical Market Integration for Beef Prices Using Vector Error Correction Model (VECM) In Indonesia

Normatively, price changes that occur in the consumer market will be passed on to the producer’s market. The price change is not necessarily enjoyed by beef cattle farmers in Indonesia. The purpose of this research was to examine whether there is a vertical market integration of beef among consumer and producer market in Indonesia. The examination of this issue was done through the Vector Error Correction Model (VECM). The data used in this study were secondary. This study used monthly price data of beef (Rp/kg) in Indonesia, consisting of 96 observations from January 2011 to December 2018. This study reveals that there is a long-term relationship among the consumer market and producer market in Indonesia. The short-run was also found that vertical beef market integration in Indonesia is only one direction, from consumers to producers. This finding represents that the beef market is vertically integrated, but the integration is not perfect. Imperfect integration of beef marketing in Indonesia signifies that the beef market in Indonesia is inefficient both in the short and long term. This study recommends the government formulate policies that provide infrastructure to avoid market exploitation and asymmetry information from the consumer market to the producer market. Besides, the government needs a price brand policy, where the government sets a reasonable price disparity between prices at the farm level and prices at the consumer level.

Editorial for Wiley's IJSCN Special Issue “Satellite networks integration with 5G”

Editorial for Wiley's IJSCN Special Issue “Satellite networks integration with 5G”

Immediate impact of COVID-19 pandemic on farming systems in Central America and Mexico

CONTEXTThe COVID-19 pandemic has affected all sectors and human activities around the World. OBJECTIVEIn this article we present a first attempt to understand the immediate impact of COVID-19 and the sanitary measures taken by governments on farming systems in Central America and Mexico (CAM). METHODSThrough a review of information generated in these initial months of the COVID-19 pandemic (webinars, blogs, electronic publications, media) and 44 interviews with key informants across the region, we have identified the main impacts felt by different types of farming systems in the region. RESULTS AND CONCLUSIONSFrom corporate agricultural production systems, to small and medium scale entrepreneurs and smallholder subsistence farm households, all types of farming systems were impacted, more or less severely, by the different measures implemented by governments such as reduced mobility, closure of public and private venues and restrictions in borders. Larger corporate farming systems with vertical market integration and high level of control or coordination within the supply chain, and smallholder or subsistence farming systems with important focus on production for self-consumption and little external input use, were both relatively less impacted and showed greater adaptive capacity than the medium and small entrepreneurial farming systems dependent on agriculture as their primary income and with less control over the upstream and downstream parts of their supply chain. All types of farming systems implemented a series of mechanisms to cope with the COVID-19 pandemic including the development of alternative value chains, food and agricultural products delivery systems and the exponential use of digital means to communicate and maintain the viability of the different agricultural systems. Collective action and organization of farmers also proved to be an important coping mechanism that allowed some farmers to acquire inputs and deliver outputs in the context of restricted mobility, price volatility, and general uncertainty. Some features of the CAM region played an important role in mediating the impact of COVID-19 and associated sanitary measures. We identify as particularly relevant the nature of agricultural exports, the current structure of the agricultural sector, the diversified livelihood strategies of rural households, and the importance of mobility for rural livelihoods. SIGNIFICANCEThe results presented focus only in the immediate effect of COVID-19 pandemic and the mechanisms implemented by farmers in the first months. Whether these impacts and response mechanisms will result in a transformation of the farming systems towards greater resilience and sustainability is still an open question.

Monopoly pricing in vertical markets with demand uncertainty

Motivation Pricing decisions are often made when market information is still poor. While modern pricing analytics aid firms to infer the distribution of the stochastic demand that they are facing, data-driven price optimization methods are often impractical or incomplete if not coupled with testable theoretical predictions. In turn, existing theoretical models often reason about the response of optimal prices to changing market characteristics without exploiting all available information about the demand distribution. Academic/practical relevance Our aim is to develop a theory for the optimization and systematic comparison of prices between different instances of the same market under various forms of knowledge about the corresponding demand distributions. Methodology We revisit the classic problem of monopoly pricing under demand uncertainty in a vertical market with an upstream supplier and multiple forms of downstream competition between arbitrary symmetric retailers. In all cases, demand uncertainty falls to the supplier who acts first and sets a uniform price before the retailers observe the realized demand and place their orders. Results Our main methodological contribution is that we express the price elasticity of expected demand in terms of the mean residual demand (MRD) function of the demand distribution. This leads to a closed form characterization of the points of unitary elasticity that maximize the supplier’s profits and the derivation of a mild unimodality condition for the supplier’s objective function that generalizes the widely used increasing generalized failure rate (IGFR) condition. A direct implication is that optimal prices between different markets can be ordered if the markets can be stochastically ordered according to their MRD functions or equivalently, their elasticities. Using the above, we develop a systematic framework to compare optimal prices between different market instances via the rich theory of stochastic orders. This leads to comparative statics that challenge previously established economic insights about the effects of market size, demand transformations and demand variability on monopolistic prices. Managerial implications Our findings complement data-driven decisions regarding price optimization and provide a systematic framework useful for making theoretical predictions in advance of market movements.