Purpose While traders of agricultural products are known to often exercise market power, this power has rarely been quantified for developing countries. The paper aims to discuss this issue. Design/methodology/approach In order to derive a measure, the authors estimate the traders’ revenue functions and calculate the marginal value products directly from them. The authors subsequently find the determinants affecting their individual market power. Findings Results show that market power at the traders’ level exists and is substantial. This market power is amplified in situations of extreme remoteness, and weakens with increasing market size. Originality/value An exceptional data set with detailed information on the business practices of rubber traders in Jambi, Indonesia is employed with an innovative methodology to directly estimate revenue functions.

Buyer market power can significantly reduce farm prices and incomes, making curtailment of such power a key strategy to improve rural livelihoods in emerging economies. A “double marginalization problem” occurs when market power is exercised at multiple stages in a supply chain. Although double marginalization has been studied extensively from a seller‐power perspective, the corresponding problem on the buyer‐power side has received scant attention. This paper addresses that lacuna through developing a vertical market model that allows buyer power to be exercised in local farmer–trader markets and also downstream at the trader–processor stage. We derive equilibrium results for output, prices, and economic welfare under alternative competition scenarios. The model is applied to the Indonesian rubber value chain by estimating the magnitude of buyer market power in farmer–trader and trader–processor interactions and quantifying the extent of welfare loss and redistribution of income among market participants due to double marginalization. Standard theory for seller double marginalization posits that it should be eliminated through vertical coordination within the supply chain. We conclude by discussing why such coordination may not occur within emerging‐economy supply chains and considering policy innovations to facilitate better coordination.

Purpose In Indonesia, rubber is the most valuable export crop produced by small scale agriculture and plays a key role for inclusive economic development. This potential is likely to be not fully exploited. The observed concentration in the crumb rubber processing industry raises concerns about the distribution of export earnings along the value chain. Asymmetric price transmission (APT) is observed. The paper aims to discuss these issues. Design/methodology/approach This study investigates the price transmission between international prices and the factories’ purchasing prices on a daily basis. An auto-regressive asymmetric error correction model is estimated to find evidence for APT. In a subsequent step the rents that are redistributed from factories to farmers are calculated. The study then provides estimations of the size of this redistribution under different scenarios. Findings The results suggest that factories do indeed transmit prices asymmetrically, which has substantial welfare implications: around USD3 million are annually redistributed from farmers to factories. If the price transmission was only half as asymmetric as it is observed, the majority of this redistribution was re-diverted. Originality/value This study combines the approaches of non-parametric and parametric estimation techniques of estimating APT processes with a welfare perspective to quantify the distributional consequences of this intertemporal marketing margin manipulation. Especially the calculation of different scenarios of alternative price transmissions is a novelty. The data set of prices on such a disaggregated level and high frequency as required by this approach is also unique.

Most models that try to explain economic growth indicate exponential growth paths. In recent years, however, a lively discussion has emerged considering the validity of this notion. In the empirical literature dealing with drivers of economic growth, the majority of articles is based upon an implicit assumption of exponential growth. Few scholarly articles have addressed this issue so far. In order to shed light on this issue, we estimate autoregressive integrated moving average time series models based on Gross Domestic Product Per Capita data for 18 mature economies from 1960 to 2013. We compare the adequacy of linear and exponential growth models and conduct several robustness checks. Our findings cast doubts on the widespread belief of exponential growth and suggest a deeper discussion on alternative economic grow theories.

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