[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/jqe/jqenew/v8y2010i2p142-158.html
   My bibliography  Save this article

Structure of the World Wheat Market: Some Implications for Strategic Trade Policy?

Author

Listed:
  • C. S. C. Sekhar
Abstract
Market structure has a crucial bearing on the price formation mechanism. The present study is an attempt to analyze the market structure of the world wheat market. Market power of the `traditional oligopolists' (US, Canada and Australia) is assessed using the standard oligopoly models. Structural and partially reduced-form models are used in the estimation of market power. The results indicate absence of market power in international markets for any of the major wheat exporters. The absence of market power in international markets has one important implication for trade policy of the exporting countries. In the absence of evidence of any imperfection in international market structure, the present subsidization of wheat production and exports by EU and US cannot be justified on the grounds of strategic trade policy of the new trade theories.

Suggested Citation

  • C. S. C. Sekhar, 2010. "Structure of the World Wheat Market: Some Implications for Strategic Trade Policy?," Journal of Quantitative Economics, The Indian Econometric Society, vol. 8(2), pages 142-158.
    • Handle: RePEc:jqe:jqenew:v:8:y:2010:i:2:p:142-158
    as

    Download full text from publisher

    File URL: http://www.jqe.co.in/journals/JQE_v8_n2_2010_p9.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Michael Spence, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 43(2), pages 217-235.
    2. Carter, Colin A. & MacLaren, Donald & Yilmaz, Alper, 1999. "How Competitive Is The World Wheat Market?," Working Papers 11973, University of California, Davis, Department of Agricultural and Resource Economics.
    3. Thomas W. Hertel & Roman Keeney & Maros Ivanic & L. Alan Winters, 2007. "Distributional effects of WTO agricultural reforms in rich and poor countries [‘Elasticities of substitution and factor supply in Canadian, Mexican, and US agriculture’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 22(50), pages 290-337.
    4. Tyers, Rod & Anderson, Kym, 1989. "Price elasticities in international food trade: synthetic estimates from a global model," Journal of Policy Modeling, Elsevier, vol. 11(3), pages 315-344.
    5. Charles D. Kolstad & Anthony E. Burris, 1986. "Imperfectly Competitive Equilibria in International Commodity Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(1), pages 27-36.
    6. Carter, Colin A & MacLaren, Donald, 1997. "Price or Quantity Competition? Oligopolistic Structures in International Commodity Markets," Review of International Economics, Wiley Blackwell, vol. 5(3), pages 373-385, August.
    7. Breusch, T S, 1978. "Testing for Autocorrelation in Dynamic Linear Models," Australian Economic Papers, Wiley Blackwell, vol. 17(31), pages 334-355, December.
    8. D. Gale Johnson, 1975. "World Agriculture, Commodity Policy, and Price Variability," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(5), pages 823-828.
    9. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    10. Alexander H. Sarris & John Freebairn, 1983. "Endogenous Price Policies and International Wheat Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 214-224.
    11. Jonathan Eaton & Gene M. Grossman, 1986. "Optimal Trade and Industrial Policy Under Oligopoly," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(2), pages 383-406.
    12. Colin Carter & Andrew Schmitz, 1979. "Import Tariffs and Price Formation in the World Wheat Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(3), pages 517-522.
    13. Alex F. McCalla, 1966. "A Duopoly Model of World Wheat Pricing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 48(3_Part_I), pages 711-727.
    14. Hertel, Thomas W. & Keeney, Roman & Ivanic, Maros & Winters, L. Alan, 2006. "Distributional effects of WTO agricultural reforms in rich and poor countries," Policy Research Working Paper Series 4060, The World Bank.
    15. Chris M. Alaouze & A. S. Watson & N. H. Sturgess, 1978. "Oligopoly Pricing in the World Wheat Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(2), pages 173-185.
    16. Goldberg, Pinelopi Koujianou & Knetter, Michael M., 1999. "Measuring the intensity of competition in export markets," Journal of International Economics, Elsevier, vol. 47(1), pages 27-60, February.
    17. Gail L. Cramer & Eric J. Wailes & Shangnan Shui, 1993. "Impacts of Liberalizing Trade in the World Rice Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(1), pages 219-226.
    18. Shiva S. Makki & Luther G. Tweeten & Mario J. Miranda, 1996. "Wheat Storage and Trade in an Efficient Global Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 879-890.
    19. Just, Richard E & Schmitz, Andrew & Zilberman, David, 1979. "Price Controls and Optimal Export Policies under Alternative Market Structures," American Economic Review, American Economic Association, vol. 69(4), pages 706-714, September.
    20. Miljkovic, Dragan, 2004. "Agricultural trade, commodity programs, and income protection in the United States," Journal of Policy Modeling, Elsevier, vol. 26(1), pages 41-46, January.
    21. Cheng Hsiao, 1997. "Cointegration and Dynamic Simultaneous Equations Model," Econometrica, Econometric Society, vol. 65(3), pages 647-670, May.
    22. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    23. Krugman, Paul R, 1987. "Is Free Trade Passe?," Journal of Economic Perspectives, American Economic Association, vol. 1(2), pages 131-144, Fall.
    24. Baldwin, Robert E, 1992. "Are Economists' Traditional Trade Policy Views Still Valid?," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 804-829, June.
    25. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
    26. Alan Love, H. & Rausser, Gordon C., 1997. "Flexible public policy: The case of the United States wheat sector," Journal of Policy Modeling, Elsevier, vol. 19(2), pages 207-236, April.
    27. Lancaster, Kelvin, 1980. "Intra-industry trade under perfect monopolistic competition," Journal of International Economics, Elsevier, vol. 10(2), pages 151-175, May.
    28. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    29. Labson, B. Stephen, 1994. "Modeling distortionary aspects of the U.S. wheat program and policy reform," Journal of Policy Modeling, Elsevier, vol. 16(3), pages 237-263, June.
    30. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057, Elsevier.
    31. Baker, Jonathan B. & Bresnahan, Timothy F., 1988. "Estimating the residual demand curve facing a single firm," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 283-300.
    32. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    33. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
    34. A. P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 1(3), pages 157-175.
    35. Riethmuller, Paul & Roe, Terry, 1986. "Government intervention in commodity markets: The case of Japanese rice and wheat policy," Journal of Policy Modeling, Elsevier, vol. 8(3), pages 327-349.
    36. Sekhar, C. S. C., 2003. "Price formation in world wheat markets -- implications for policy," Journal of Policy Modeling, Elsevier, vol. 25(1), pages 85-106, January.
    37. Giovanni Anania & Mary Bohman & Colin A. Carter, 1992. "United States Export Subsidies in Wheat: Strategic Trade Policy or Expensive Beggar-Thy-Neighbor Tactic?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(3), pages 534-545.
    38. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Glauben, Thomas & Imamverdiyev, Nizami & Perekhozhuk, Oleksandr & Prehn, Sören, 2014. "Competitive Structure of Kazakhstan, Russia and Ukraine in World Wheat Market: Gravity Model Approach," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182949, European Association of Agricultural Economists.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Labson, B. Stephen & Rausser, Gordon C., 1992. "Modeling Phased Reduction of Distortionary Policies in the U.S. Wheat Market Under Alternative Macroeconomic Environments," Staff General Research Papers Archive 502, Iowa State University, Department of Economics.
    2. Jeffrey D. McDonald & Daniel A. Sumner, 2003. "The Influence of Commodity Programs on Acreage Response to Market Price: With an Illustration Concerning Rice Policy in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 857-871.
    3. D. MacLaren, 1991. "Agricultural Trade Policy Analysis And International Trade Theory: A Review Of Recent Developments," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(3), pages 250-297, September.
    4. Reimer, Jeffrey J. & Stiegert, Kyle W., 2006. "Evidence on Imperfect Competition and Strategic Trade Theory," Staff Paper Series 498, University of Wisconsin, Agricultural and Applied Economics.
    5. Stiegert, Kyle W. & Wang, Shinn-Shyr, 2003. "Imperfect Competition And Strategic Trade Theory: What Have We Learned," Working Papers 14589, International Agricultural Trade Research Consortium.
    6. Krugman, Paul R., 1989. "Industrial organization and international trade," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 20, pages 1179-1223, Elsevier.
    7. Thursby, Marie C. & Thursby, Jerry G., 1991. "Strategic Trade Theory and Agricultural Markets: An Application to Canadian and U.S. Wheat Exports to Japan," Occasional Papers 233062, Regional Research Project NC-194: Organization and Performance of World Food Systems.
    8. Carter, Colin A. & MacLaren, Donald & Yilmaz, Alper, 1999. "How Competitive Is The World Wheat Market?," Working Papers 11973, University of California, Davis, Department of Agricultural and Resource Economics.
    9. Chen, Chi-Chung & McCarl, Bruce A. & Chang, Ching-Cheng & Hsu, Shih-Hsun, 2002. "Spatial Equilibrium Modeling With Imperfectly Competitive Markets: An Application To Rice Trade," 2002 Annual meeting, July 28-31, Long Beach, CA 19687, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Mccorriston, Steve & Sheldon, Ian, 1989. "Imperfect Competition, Trade Policy and Processed Agricultural Products," Occasional Papers 232831, Regional Research Project NC-194: Organization and Performance of World Food Systems.
    11. Sergio de Nardis & Cristina Pensa, 2004. "How intense is Competition in International Markets of Traditional goods?," ISAE Working Papers 45, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    12. Kresimir Zigic, 2011. "Strategic Interactions in Markets with Innovative Activity: The Cases of Strategic Trade Policy and Market Leadership," CERGE-EI Books, The Center for Economic Research and Graduate Education - Economics Institute, Prague, edition 1, number b06, May.
    13. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455, Elsevier.
    14. Gaynor, Martin & Vogt, William B., 2000. "Antitrust and competition in health care markets," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 27, pages 1405-1487, Elsevier.
    15. Holloway, Garth J., 1995. "Conjectural Variations With Fewer Apologies," Working Papers 225880, University of California, Davis, Department of Agricultural and Resource Economics.
    16. Ian M. Sheldon, 2021. "Reflections on a Career as an Industrial Organization and International Economist," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 468-499, June.
    17. Anis, Aslam H. & Benarroch, Michael & Wen, Quan, 2002. "Persistent protection in an international exit game," Journal of International Economics, Elsevier, vol. 56(2), pages 465-487, March.
    18. Martin Gaynor, "undated". "What Do We Know About Competition and Quality in Health Care Markets?," GSIA Working Papers 2006-E62, Carnegie Mellon University, Tepper School of Business.
    19. repec:jes:wpaper:y:2012:v:4:p:736-746 is not listed on IDEAS
    20. Liviu-George Maha & Andreea-Nicoleta Donici & Andreea Maha, 2012. "Limits And Difficulties In Implementing The Strategic Trade Policy," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4(4), pages 736-746, December.
    21. Sabien Dobbelaere & Jacques Mairesse, 2013. "Panel data estimates of the production function and product and labor market imperfections," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 1-46, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jqe:jqenew:v:8:y:2010:i:2:p:142-158. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: D. M. Nachane or the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/tiesoea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.