Most fresh produce commodities are highly perishable. Thus, supply at any time is fixed at prices above marginal harvest costs. In this paper we develop a model of short‐run farm price determination for produce commodities that incorporates this key structural feature and also allows for imperfect competition in price determination. The model is empirically manifest in a switching regression framework and applied to California iceberg lettuce. Results support the general model relative to a model restricted to competitive behavior and suggest that retailer/buyers capture most of the rents from lettuce production and sale.
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Sexton et al. (1996) studied this question.
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