Industrial Organization in Agricultural Economics: Trends and Frontiers
The October C-FARE webinar highlights recent work on industrial organizations in agricultural economics, with a focus on how methods and applications have evolved and what they mean for today's food and agricultural markets. Presentations will include an overview of the history and contributions of IO research in agricultural economics, an examination of applications to labor markets and food retail,and adapting Ag-IO to the realities of modern agricultural markets, particularly contract procurement. Together, the speakers will connect lessons from past scholarship to the realities of modern agricultural markets and discuss how these insights can inform research, policy, and practice.
Doruk Cengiz – Fifty Years of IO in Agricultural Economics
Doruk Cengiz presented findings from a paper co-authored with Christian Rojas that analyzes 50 years of industrial organization (IO) research in agricultural and resource economics. Motivated by the observation that IO-themed work has grown within the field, they compiled nearly 30,000 abstracts from top agricultural economics and IO journals and collected citation data from Google Scholar and Web of Science. Their analysis confirmed that IO-related papers in agricultural economics have increased from about 20% of publications in the 1980s to nearly 35% today, and these papers now receive citation rates comparable to those in economics journals. Using large language models, they identified topics, methods, and trends across journals and incorporated expert surveys to understand how scholars view the field’s evolution.
Cengiz highlighted several key findings: IO research in both agricultural economics and economics has shifted toward downstream topics such as consumer demand, food, climate, digitization, and retail. However, methods diverge—agricultural economics relies more on reduced-form and descriptive approaches, while economics IO continues to emphasize causal and structural modeling. Citation patterns appear associated with practical relevance, as agricultural economics papers often appeal to academics, policymakers, and industry audiences. Cengiz also noted a persistent gap between scholars’ perceptions and the actual influence of agricultural economics journals, and emphasized growing interest in raising methodological standards through combining empirical IO, data science, and geospatial tools.
Tim Richards – Empirical IO in Agriculture
Tim Richards examined the declining use of structural modeling in agricultural IO research, a trend highlighted in the Cengiz and Rojas analysis. He noted that while reduced-form and causal inference methods have become more common, structural models remain essential for many policy-relevant insights, especially those related to market power. Richards emphasized that shifting away from structural approaches risks losing deeper information about how firms and markets interact, particularly in contexts where simple elasticity-based measures fall short.
Richards illustrated this point with examples across vertical relationships, labor markets, supply chains, and retail competition. In bargaining settings, structural models can produce different conclusions about mergers, negotiation outcomes, and price discrimination. Labor market questions—such as estimating markdowns or defining shortages—also rely on search, match, and bargaining frameworks. He highlighted emerging work that treats supply chains as complex adaptive systems shaped by relationship-specific investments, as well as new research on hyper-local retail competition that goes beyond price to include baskets, perishables, and service quality. Richards concluded that despite the popularity of newer empirical methods, structural modeling is still crucial for understanding key dynamics in agricultural markets.
Richard Sexton – Key to Issues in Modern AG Markets
Richard Sexton discussed the major industrial organization issues shaping modern agricultural markets, contrasting them with the frameworks used when he entered the profession in the 1980s. He explained how the field shifted from the loose structure-conduct-performance paradigm to structural models that tested market power more rigorously. However, he emphasized that many of these traditional models fall short in today’s markets, which are dominated by contract-based transactions, streamlined supply chains, and firms with large sunk investments. Because many contracts include fixed prices and long durations, spot-market models often fail to capture real price transmission and behavior.
Sexton also highlighted how product differentiation, credence attributes, and the rise of powerful international grocery chains have reshaped the competitive landscape. Differentiation gives sellers market power, and retailer practices like zone pricing and maintaining stable market baskets challenge standard modeling approaches. He argued that modern contract markets aim to maximize total surplus, creating long-run, symbiotic relationships between buyers and a small number of reliable suppliers—often increasing concentration but improving efficiency. Sexton concluded by outlining “good, bad, and ugly” market structures, noting that highly concentrated but stable markets can function well, while loose oligopolies and emerging markets dominated by itinerant traders often yield poor outcomes due to free-riding, collusion, and weak enforcement.
This program is supported in part by the Agricultural and Applied Economics Association.