Traders and Credit Constrained Farmers: Market Power along Indonesian Rubber Value Chains
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While traders of agricultural products are known to often exercise market power, this power has rarely been quantified for developing countries. In
order to derive a measure, we estimate the traders' revenue functions and calculate the Marginal Value Products directly from them. We subsequently find determinants affecting their individual market power. An exceptional data set with detailed information on the business practices of rubber traders
in Jambi, Indonesia is employed. 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.