Price elasticities in international food trade: synthetic estimates from a global model
Date
Authors
Tyers, Rod
Anderson, Kym
Journal Title
Journal ISSN
Volume Title
Publisher
Elsevier
Abstract
Government intervention, particularly in agricultural commodity markets, is frequently
justified on the grounds that it favorably affects the terms of trade. In this
paper an established dynamic simulation model of seven food commodity markets is
used to provide synthetic estimates of the elasticities of net export demand and import
supply on which such justifications rest. Estimates are presented for both the short
and long runs, and the effects of market-insulating agricultural policies on these
elasticities are investigated. The results cast doubt on the proposition that any individual
economy has strong monopoly or monopsony power in international food markets in
anything other than the very short run. But effective cooperation by groups of exporting
countries, such as the Cairns Group of “nonsubsidizing” agricultural exporters, along
with the United States or even the EC, could yield substantial market power to those
groups in both the short and long runs. Nevertheless, the major part of the power such
groups might wield stems from self-imposed domestic-market-insulating agricultural
policies in the rest of the world.
Description
Keywords
agricultural, commodity, markets, trade, simulation, model, food, elasticities, export, import, monopoly, monopsony, international, Cairns Group, nonsubsidizing
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Source
Journal of Policy Modeling
Type
Journal article