Efficiency, Innovation and Organization in the Food industry
This PhD thesis deals with two main issues: (i) the innovation and labeling regime in an imperfect competitive market and (ii) the emergence and efficiency of organizational forms for innovative products in the agri-food industry.
The main contributions of the thesis are firstly the investigation of the economic implications of labeling a new product in a vertically integrated and vertically differentiated market system. Secondly, the choice of organizational form for a product associated with high asset specificity and high risk. Thirdly, the combination of private and public initiatives for an innovative product with potential environmental impact.
An applied theoretical approach is implemented in the first two papers of this thesis in order to explore the economic effects of the introduction of an environmentally friendly genetically modified (GM) product, and the economic effects of the labeling regime associated with GM products. The empirical analyses, used in the last two papers, deal with the way transaction attributes of an innovative product lead to choice of organizational form, and the efficiency associated with different organizational forms in agriculture.
The Danish potato sector is used as a case study to highlight different issues. Paper I uses a theoretical framework to estimate the market potential for a new technology such as a genetically modified crop, which has both private good as well as a public good characteristics. The results indicate that the market adoption of a GM product depends on the effect of the new technology on the incremental savings and costs as well as consumers’ aversion and the carbon emission market price. The carbon emission market is used as a key parameter which, besides the cost reduction, can potentially transform the GM product to an environmental policy instrument.
Paper II uses an applied theoretical model to analyze the economic effects of different labeling regimes in vertical markets. The model used in the paper consists of heterogeneous consumer preferences and heterogeneous producer returns in a vertical oligopoly setting. The results indicate that a change in purity thresholds creates winners and losers among consumers and producers of both GM and non-GM products.
Paper III uses both a theoretical and an empirical methodology to analyze the factors that have influenced the re-emergence of the new generation cooperatives (NGC). The analysis indicates that the type of organization depends heavily on the level and orientation of asset specificity as well as on the downstream market. Various problems that occur due to transaction costs tied to the asset specificity are compared in different settings. Furthermore, we claim that the orientation of the asset specificity and the contract-based final market have resulted in the emergence of the NGC. Given that different types of products are characterized by different level/orientation asset specificity and different market structures, we stress that an organizational structure reflects the product specificity.
Paper IV uses a non-parametric, traditional input oriented Data Envelopment Analysis (DEA) to compare the performance of the investor owned firm (IOF) and cooperative types of organization at the farm level. The analysis accounts for a difference in the performance of the two groups in terms of efficiency. The respective markets, contract-based or spot market, are set to be key factors that influence the performance of the respective group of farms. While the cooperative farms aim to reduce their risk by intensively using contracts, the IOF farms aim to maximize benefits by taking advantage of the dynamic spot market.
Professor Konstantinos Karantininis, Department of Food and Resource Economics, University of Copenhagen
Professor Jens Leth Hougaard, Department of Food and Resource Economics, University of Copenhagen (chairman);
Professor Konstantinos Giannakas, University of Nebraska, Lincoln, USA;
Assistant Professor Liesbeth Dries, Wageningen University, The Netherlands.