SCIENTIA GEOGRAPHICA SINICA ›› 2015, Vol. 35 ›› Issue (11): 1357-1363.doi: 10.13249/j.cnki.sgs.2015.011.1357

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The Impact of Place on the Monopoly profit of a Geographical Indication Product : A Case of Dongting Biluochun Tea in Suzhou

Shang-yi ZHOU1(), Jing ZHANG1,2   

  1. 1. School of Geography, Beijing Normal University, Beijing 100875, China
    2. National Institute of Material Reserves, Beijing 100834, China
  • Received:2014-07-31 Revised:2014-10-20 Online:2015-11-20 Published:2015-11-20

Abstract:

Place is one of the core concepts of geography. A place is a unique geographical unit created by humans on the earth’s surface. Based on the theory of place, we carry out the interviews survey in the original production area of Dongting Biluochun Tea which is located in Dongshan Town and Jinting Town (formerly Xishan Town), Wuzhong District, Suzhou. We analyze the role of place in the production and sale of Dongting Biluochun Tea. Using theories of differential rent and monopoly market, this article explains how this place obtained differential rent and monopoly profits by being the site an important historical event. The conclusions are the following. First, a historical event happened in a specific place which cannot be moved to other place. This site became a factor that results in a differential rent. The legend of Biluochun Tea is considered equal to the investment by people of the land itself, which associates the local Biluochun Tea with culture quality which other Biluochun Tea does not have. The culture quality attracts some consumers and then forms the market demand which results in higher prices. Second, it is difficult to identify the specific features of a geographical indication product using a physical or chemical test, a feature which is associated with a specific historical event. The local tea producers are unable to obtain monopoly profits and thus it is difficult to execute a policy to protecting specific geographically indigenous products. Many tea makers and sellers in the past came to Dongshan and Xishan to sell fake Dongting Biluochun Tea for profit. To understand this practice, this study provides some assumptions or conditions. First, when calculating the differential rent, we make two assumptions: 1) there are no regional differences in the labor force and 2) the purchasing price of tea-leaves is equal to cost of planting the original tea. These two assumptions could affect the accuracy of the estimation of differential rent in this study. Second, when analyzing the structure of the monopoly profits, we assume that Dongshan Town and Jinting Town can be seen as a tea production group. However, there are so many producers and sellers in the production and sales market. Because of the many producers or sellers, it is obvious that competition exists in the market. The result is that the Dongting Biluochun Tea's market price is formed based on a “price game” between the many merchants, not determined by the rules in the monopoly market where the monopoly enterprise controls the output and sets the price. If the underlying assumptions or conditions described above change, the results of any analysis would likely be discounted. Further analysis needs to be done and any new conditions that might develop. Finally, based on the analysis above, our study provides two specific suggestions to local government shopping to successfully market Dongting Biluochun Tea: 1) to strengthen the brand value of Dongting Biluochun Tea and 2) to protect geographically indigenous products through specific laws and regulations.

Key words: Place, differential rent, monopoly profits, Dongting Biluochun Tea, geographically indigenous products

CLC Number: 

  • F129.9