Producers surplus and market structure conduct performance

relationship ,types of producer surplus, selling behaviour of farmer, factor affecting marketable surplus, market structure, features , components of market, types of market structure , market structure dynamics, market conduct, market performance, performance and changing markets

1. Assignment Title Producer Surplus and Marketing S tructure C onduct P erformance By S.ADHIYAMAAN B.Sc. Horticulture

2. PRODUCER’S SURPLUS This is the quantity which is actually made available to the non-producing population of the country. From the marketing point of view, this surplus is more important than the total production of commodities . An increase in production must be accompanied by an increase in the marketable surplus for the economic development of the country .

3. Importance of Producer’s Surplus Framing Sound Price Policies Developing Proper Procurement and Purchase Strategies Checking Undue Price Fluctuations Export/Import policies Development of Transport and Storage Systems

4. Relationship between Marketed surplus and Marketable surplus The marketed surplus is more than the marketable surplus Marketed surplus > Marketable surplus The marketed surplus is more than the marketable surplus when the farmer retains a smaller quantity of crop than his actual family and farm requirements . The marketed surplus is less than the marketable surplus Marketed surplus < Marketable surplus This situation holds good under a) large farmers generally sell less than the marketable surplus because of their better retention capacity. The marketed surplus may be equal to the marketable surplus Marketed surplus = Marketable surplus The marketed surplus may be equal to the marketable surplus when the farmer neither retains more nor less than his requirement.

5. Types of Producer's Surplus Marketable Surplus The marketable surplus is that quantity of the produce which can be made available to the non-farm population of the country. Where MS = Marketable surplus P = Total production, and C = Total requirements (family consumption, farm needs, payment to labour , artisans, landlord and payments for social and religious work ). Marketed Surplus Marketed surplus is that quantity of the produce which the producer-farmer actually sells in the market, irrespective of his requirements for family consumption, farm needs and other payments.

6. Relationship between prices and marketable surplus Inverse relationship This implies that the farmers' consumption is a residual, and that the marketed surplus is inversely proportional to the price level. This behaviour assumes that farmers have inelastic cash requirements. Positive relationship This relationship is based on the assumption that farmers are price conscious.

7. Selling Behaviour of Farmers It is determined by the following factors Financial condition of the farmer Nature of commodity to be marketed Marketable surplus Binding of farmer to particular middleman. Development of marketing institutions. Transport and infrastructure facilities availability. Market information Government policies Weather conditions at the time of harvest Packing materials and destination of markets.

8. Factors Affecting Marketable Surplus Size of Holding Production Price of the Commodity Size of Family Requirement of Seed and Feed Nature of Commodity Consumption Habits M = f(x1, x2, x3, x4)

9. Market Structure The term structure refers to something that has organization and dimension – shape, size and design; and which is evolved for the purpose of performing a function. Market structure refers to those organizational characteristics of a market which influence the nature of competition and pricing, and affect the conduct of business firms Market structure refers to those characteristics of the market which affect the traders' behaviour and their performances.

10. Features of Market Structure The number of firms The market share of the largest firms The nature of costs The degree to which the industry is vertically integrated The extent of product differentiation Entry barriers The degree of standardization of product Pricing

11. Components of market Concentration of Market Power Degree of Product Differentiation Conditions for entry of Firms in the Market Flow of Market Information Degree of Integration

12. Types of market structure

13. Characteristics of Monopoly Monopolies can maintain super-normal profits in the long run. As with all firms, profits are maximized when MC = MR. With no close substitutes, the monopolist can derive super-normal profits, area PABC. A monopolist with no substitutes would be able to derive the greatest monopoly power.

14. Characteristics of Oligopoly

15. Duopoly & Characteristics of Monopolistic Competition Duopoly Characteristics of Monopolistic Competition

16. Influence of Market structure on Market Conduct and performance  

17. Market Structure Dynamics Market dynamics are pricing signals that are created as a result of changing supply and demand levels in a given market . Market dynamics is a fundamental concept in supply, demand and pricing economic models

18. Market Conduct Market conduct refers to the price and other market policies pursued by sellers, in terms both of their aims and of the way in which they coordinate their decisions and make them mutually compatible.

19. Conduct and market structure Market structure Conduct of Firms Performance The conduct of firms in a market can affect market structure – e.g. merger and takeover activity

20. Market Performance Performance refers to the economic outcomes that result from the market structure and the firms’ conduct. To evaluate an industry’s performance, economists consider allocation efficiency; production efficiency; equity; and technological advancement.

21. Performance and changing markets Market structure Conduct of Firms Performance The actual performance of firms in the market affects market structure – e.g. rising dominance of best performing businesses – examples: pharmaceuticals, food retailing

22. For satisfaction market performance, the market structure, should keep pace with the following changes Production Pattern Demand Pattern Cost and Pattern of marketing functions Technological change in industry