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Characteristics of Competition
The discussion has focused on the trends in agriculture, the causes for the trends, and the implications. The economic concepts of demand and supply were used to help understand these relationships. This page focuses on a review of the characteristics of competition to continue advancing our understanding of these relationships
Production agriculture is often cited as an example of perfect competition.
- What are the characteristics of perfect competition? (required reading) What is the implication of perfect competition?
Agribusiness firms often do not face perfect competition. Is this good or bad? Why?
- How would you describe imperfect competition? What is the implication (opportunity) for imperfect competition?
- Will the agriculture/food industry become a market of monopolistic competition?
- What causes an industry to become a market of monopolistic competition? See http://www.unc.edu/depts/econ/byrns_web/Economicae/monocompt.html
- Are there strategies to shift production agriculture from perfect competition?
- How do these strategies relate to "consumers are becoming more specific or demanding?"
- How do these strategies relate to production technology and market information?
- What prevents producers from shifting to imperfect competition?
- Consider again the ideas of willingness to assume risk and ability to assume risk.
- How might producers overcome this barrier?
- "... various sectors of the food economy -- from producers to processors to retailers -- are more interconnected than ever before, and grow more so every day ... These contextual changes mean the United States must think differently about the agricultural and food system infrastructure." excerpt from "Food and Agricultural Policy -- Taking Stock for the New Century," page 65 of pdf file
- "Concentration and vertical integration in other agricultural sectors raises questions about the utility and validity of traditional spot-market price data, and may make it increasingly difficult to collect adequate information on such variables as production costs and farm income. There is a growing need to collect data and conduct research and analysis that will help market participants adjust to market changes and to contribute to more informed public policy deliberations relating to structural change. This will require knowing more about supply chain linkages. However, less public information is available about increasingly private market transactions." excerpt from "Food and Agricultural Policy -- Taking Stock for the New Century," page 75 of pdf file
- "Farmers once purchased inputs and sold products in arms-length transactions and largely were price takers in both markets. But, those lines are fast blurring, with differentiated products, bundled systems, and greater system coordination. Buyers and sellers of agricultural commodities and producers rely less on cash markets and more on dozens of kinds of contractual arrangements." excerpt from "Food and Agricultural Policy -- Taking Stock for the New Century," page 25 of pdf file
Kay et. al. mention that production agriculture will be more reliant on employees in the future. Why? What opportunities does this offer? What challenges does this offer?
In summary, what are some general descriptors for agriculture in the 21st century?
- How do these descriptors relate to the list of economic resources (land, labor, capital and entrepreneurial ability)? Can we discuss agriculture for the 21st century in terms of land, labor, capital, information and risk?
Bottom line: will we use a collaborative approach to feed the world?
Last Updated September 5, 2010
Email: David.Saxowsky@ndsu.edu
This material is intended for educational purposes only. It is not a substitute for competent professional advice. Seek appropriate advice for answers to your specific questions.
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