The Role of Spatial Density and Technological Investment on Optimal Pricing Strategies in the Grain Handling Industry

摘要

Shuttle-loading elevators represent an investment that may lower marginal grain-handling costs. Some portion of those savings could be passed on to farmers in the form of higher cash prices. We model the pass-through decision and exploit a natural, historical difference in Kansas and Montana wheat markets to test several pass-through hypotheses empirically. Using cross-sectional, temporal, and spatial variation in weekly wheat prices in 2005-2013, we find that-relative to conventional grain elevators in Kansas-shuttle-loading facilities offer a $0.13 per bushel premium. In Montana-where there is less spatial competition among elevators-the pass-through is only $0.04 per bushel.