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A spatial equilibrium analysis of trade policy reforms on the world wheat market

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  • Antonio Gomez-Plana
  • Stephen Devadoss

Abstract

Since a few countries produce most of the world's wheat, and consumption is widespread across the world, wheat is one of the most commonly traded agricultural commodities. In recent years, the wheat market has been going through difficult phases as wheat prices are depressed. The fall in wheat prices is attributed to a supply glut and restrictive trade barriers. This study develops a large-scale spatial equilibrium trade model for wheat to analyse the effects of removing trade barriers (tariffs and subsidies) on each country's/region's price, supply, demand, trade, welfare, and bilateral trade flows. The results show that trade liberalization leads to an increase (decrease) in prices in the exporting (importing) countries. Production and exports increase in the exporting country, and consumption and imports increase in the importing country. Consequently, the volume of trade also increases. The welfare of most countries rises, and thus, world welfare also rises.

Suggested Citation

  • Antonio Gomez-Plana & Stephen Devadoss, 2004. "A spatial equilibrium analysis of trade policy reforms on the world wheat market," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1643-1648.
    • Handle: RePEc:taf:applec:v:36:y:2004:i:15:p:1643-1648
    DOI: 10.1080/0003684042000266838
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    References listed on IDEAS

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    1. S. Devadoss & Michael D. Helmar & William H. Meyers, 1990. "World Wheat Trade Model: Specification, Estimation, and Validation, The," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 90-tr14, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. S. Devadoss & Michael D. Helmar & William H. Meyers, 1990. "World Wheat Trade Model: Specification, Estimation, and Validation, The," Center for Agricultural and Rural Development (CARD) Publications 90-tr14, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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    Cited by:

    1. Stephen Devadoss & William Ridley, 2014. "Effects of the Mexican Apple Tariff on the World Apple Market," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 763-777, November.
    2. Stephen Devadoss & Prasanna Sridharan & Thomas Wahl, 2009. "Effects of Trade Barriers on U.S. and World Apple Markets," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(1), pages 55-73, March.
    3. Mustafa TERIN & Fahri YAVUZ, 2017. "A spatial equilibrium analysis for the possible regional impacts of the European Union full membership on the Turkey's dairy industry," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(4), pages 185-196.
    4. Stephen Devadoss & Angel Aguiar, 2006. "Effects of global trade liberalization on softwood lumber markets," Applied Economics, Taylor & Francis Journals, vol. 38(20), pages 2351-2360.

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