Spatial competition and pricing in the agricultural chemical industry : empirical evidence from Georgia

Abstract

Little attention has been paid to spatial competition in the agricultural chemical market. This study uses a primary data set to investigate the extent and importance of spatial competition in the major row crop-producing region of Georgia. The distance to closest competitor, number of competitors within a 15-mile radius, number of farms, number of commercial farms, and gross row crop sales are variables included in the study. Price was collected through a survey of agricultural chemical retailers. The results reveal demand shifters are statistically significant, but not economically significant and the spatial variables are insignificant in both respects. These results are generally in agreement with a limited number of other studies that conclude local retailers have little impact on pesticide pricing.