Author : Jiaoju Ge
Publisher :
Page : pages
File Size : 27,98 MB
Release : 2009
Category :
ISBN :
ABSTRACT: The Florida dairy market has a few fluid milk processors and many dairy farmers. The dairy farmers are represented in negotiation with the processors by a cooperative. This dissertation builds a theoretical model for bargaining between the processors and a cooperative with outside options and risk of breakdown. The model is applied to the Florida dairy market to examine price negotiations between Florida milk processors and a dairy cooperative. Time series data was collected for the period of October 1998 to May 2009. An expectation maximization (EM) algorithm along with Maximum Likelihood Estimation was used to analyze the econometric disequilibrium model empirically in Gauss statistical software. The results show that the class I price set by the Federal Milk Marketing Order is the major factor influencing the processors' demand reservation price. Negotiated quantity and production seasonality affect the cooperative's supply reservation price. The cooperative appears to be more patient and has higher average bargaining power (0.7055) than the bargaining power for processors (0.2945). The highest (lowest) bargaining power for the cooperative (processors) occured in 2008 and the lowest (highest) bargaining power for the cooperative (processors) occurred in both 2001 and 2004.