The Impacts of Establishing Flower Auctions on Marketing Factor Benefits in Iran: a Case Study on Cut-rose Flower in Esfahan

Although Iran has many advantages in producing flowers, the traditional markets of cut flower suffer from a lot of challenges and insufficiencies such as price season fluctuation, fault in market information, inefficiency in marketing network and finally, disequilibrium of supply and demand and high loss of flowers. This study compares the two market structures that are traditional and auction markets. Herein, cut-rose flower and Esfahan province were selected as the product and the study area respectively. Study sample was contained the various marketing factors including producer, middleman, wholesaler and retailer whose information were collected during the periods of 2008-2009. Also, information related to flower auction market due to lack of this market within the country were simulated based on global market experiences and adjusting these conditions with the current domestic market. Finally, rose-flower prices in this market were estimated based on the rules of game theories in Dutch auction markets. Economic and marketing criteria were used for comparing the traditional and auction markets for rose flower. The most important of these criteria are marketing margin and efficiency. The results revealed that by switching cut rose traditional market to an auction design, total gain margin of marketing factors significantly increase and marketing criteria improve. Such criteria are expected to exhibit further gains by designing auction markets for various types of flowers in different places of the country. In this context, we recommend investing on auction market not only for cut-rose but also for all cut-flowers to be encouraged by the government agency and private sectors. Thus, Iran will be able to improve its commercial situation in the global market of flower and ornamental plants.