The Effects of Imperfect Competition on the Size and Distribution of Research Benefits

Abstract Studies of agricultural research benefits usually assume perfectly competitive markets. Studies that have allowed for market power of agribusiness firms have generally assumed unrealistic pure monopsony or monopoly behavior. This paper allows for processing firms to exhibit a range of degrees of oligopsony power in buying raw farm products and oligopoly power in selling processed farm products. The results indicate that different types of research‐induced technical change can exacerbate or ameliorate distortions from the exercise of market power by agribusiness firms, which affects the size and especially the distribution of research benefits.