ABSTRACT
In the previous five chapters a dominant theme has been competitive pricing and the equivalence of the competitive outcome with the surplus maximizing outcome of a social planner. These previous chapters also focused on pricing relationships for the same commodity or a pair of substitute commodities over space, time, form and multiple markets. In this current chapter both of these assumptions are relaxed. Specifically, the purpose of this chapter is to examine vertical pricing relationships in a typical farm-to-retail food supply chain, where downstream processing firms with market power purchase the raw commodity from upstream farmers and sell processed and semi-processed differentiated products to retail consumers.
