One of the greatest benefits of increased competition in agricultural markets is efficient price formation. Timmer, Falcon and Pearson (1983) maintained that prices are formed efficiently when large number of buyers and sellers, all with
similar access to market information, interact to agree on the basis of exchange, a price. This price sends signals to consumers about the resource costs of supplying the commodity to them and to producers about the willingness of consumers to pay the resource costs of the production. This implies that efficient price formation is essential for efficient allocation of resources in a market economy. While non-competitive agricultural markets may operate in the conventional
sense, their failure to transmit accurate signals about real opportunity cost can cause enormous misallocation of resources in production and consumption, and serious disruptions to the smooth temporal flow of agricultural goods and services
to consumers.
One of the greatest benefits of increased competition in agricultural markets is efficient price formation. Timmer, Falcon and Pearson (1983) maintained that prices are formed efficiently when large number of buyers and sellers, all withsimilar access to market information, interact to agree on the basis of exchange, a price. This price sends signals to consumers about the resource costs of supplying the commodity to them and to producers about the willingness of consumers to pay the resource costs of the production. This implies that efficient price formation is essential for efficient allocation of resources in a market economy. While non-competitive agricultural markets may operate in the conventionalsense, their failure to transmit accurate signals about real opportunity cost can cause enormous misallocation of resources in production and consumption, and serious disruptions to the smooth temporal flow of agricultural goods and servicesto consumers.
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