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Price stabilization as a factor of competitiveness of agriculture

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  • L. Grega

    (Mendel University of Agriculture and Forestry in Brno, Faculty of Business and Economics, Czech Republic)

Abstract

Price fluctuations make agriculture a risky business. High price fluctuation of agricultural commodities may have through its income effect a very unfavourable impact on the economic situation of agricultural subjects. In finding corresponding instruments of agricultural policy to stabilize prices and incomes, it is necessary to distinguish between various types of price changes. However, important question for conception of adequate price policy is how to protect against high price fluctuations and not to restrain function of price as a signal about market situation. Application of partial equilibrium analysis to evaluate impact of price stabilization policies is an adequate method, especially if price changes in the market do not cause significant price fluctuation in other markets. Using this methodological approach is possible to prove that price stabilization brings for common net benefit consumers and producers. However in practical application some additional aspects must be taken into account if dealing with stabilization of agricultural products prices.

Suggested Citation

  • L. Grega, 2002. "Price stabilization as a factor of competitiveness of agriculture," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 48(7), pages 281-284.
    • Handle: RePEc:caa:jnlage:v:48:y:2002:i:7:id:5321-agricecon
    DOI: 10.17221/5321-AGRICECON
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    References listed on IDEAS

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    1. Devadoss, Stephen & Choi, E. Kwan, 1991. "Factor Price Stabilization and the Competitive Firm," Staff General Research Papers Archive 473, Iowa State University, Department of Economics.
    2. S. Devadoss & E. Kwan Choi, 1991. "Factor Price Stabilization and the Competitive Firm," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 749-756.
    3. Frederick V. Waugh, 1944. "Does the Consumer Benefit from Price Instability?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 58(4), pages 602-614.
    4. Brian D. Wright & Jeffrey C. Williams, 1988. "Measurement of Consumer Gains from Market Stabilization," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(3), pages 616-627.
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    Cited by:

    1. Anna NOWAK & Agnieszka KAMINSKA, 2016. "Agricultural competitiveness: The case of the European Union countries," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 62(11), pages 507-516.

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