Spatial competition in the Iowa Corn Market: Informing the pricing behavior of corporate and cooperative grain merchants
We study spatial competition in the agricultural input procurement sector by explaining variability in corn cash price offers from grain merchants in Iowa. While rail access, river access, size, and ethanol production exhibit the expected positive relationships to corn cash prices, the impact of ownership structure (corporate or cooperative) is complex. Taking distance-based and density-based approaches to spatial competition, we find corporate and cooperative grain merchants differ in their pricing behavior when confronted with spatial competitors. Consistent with theoretical expectations, cooperative grain merchants play a yardstick role in relation to both corporate and cooperative grain merchants.