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Operational Efficiency Of A U.S./Canadian Wheat Pool: A Game Theory Analysis

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  • Nganje, William E.
  • Koo, Won W.
  • Park, Joon J.
  • Taylor, Richard D.

Abstract

The problem of declining wheat prices and excess supply has been the subject of recent economic studies partly because it coincides with the Federal Agriculture Improvement and Reform (FAIR) Act of 1996, and partly because efforts to decrease supply domestically have led to increased imports from Canada. This paper develops a game theory optimization model of market efficiency and derives conditions under which voluntary pooling is sustained for U.S./Canadian durum and hard red spring wheat producers. Analysis reveals that U.S. and Canadian farmers can increase farm returns with efficiency gains from pooling and by internalizing benefits from grain blending and logistics. The model is used to analyze diverse factors affecting the sustainability of such a pool.

Suggested Citation

  • Nganje, William E. & Koo, Won W. & Park, Joon J. & Taylor, Richard D., 2001. "Operational Efficiency Of A U.S./Canadian Wheat Pool: A Game Theory Analysis," Staff Papers 23661, North Dakota State University, Department of Agribusiness and Applied Economics.
    • Handle: RePEc:ags:nddsps:23661
    DOI: 10.22004/ag.econ.23661
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    References listed on IDEAS

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    1. Johnson, D. Demcey & Nganje, William E., 2000. "Impacts Of Don In The Malting Barley Supply Chain: Aggregate Costs And Firm-Level Risks," Agricultural Economics Miscellaneous Reports 23103, North Dakota State University, Department of Agribusiness and Applied Economics.
    2. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
    3. Swenson, Andrew L., 1998. "Financial Characteristics Of North Dakota Farms, 1995-1997," Agricultural Economics Reports 23200, North Dakota State University, Department of Agribusiness and Applied Economics.
    4. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    5. Ronald A. Babula & Cathy L. Jabara & John Reeder, 1996. "Role of empirical evidence in US|Canadian dispute on US imports of wheat, wheat flour, and semolina," Agribusiness, John Wiley & Sons, Ltd., vol. 12(2), pages 183-199.
    6. Koo, Won W. & Nganje, William E. & Johnson, D. Demcey & Park, Joon J. & Taylor, Richard D., 1999. "Economic Analysis Of The Proposed North Dakota Wheat Pool; Summary," Agricultural Economics Reports 23453, North Dakota State University, Department of Agribusiness and Applied Economics.
    7. Koo, Won W. & Nganje, William E. & Johnson, D. Demcey & Park, Joon J. & Taylor, Richard D., 1999. "Economic Analysis Of The Proposed North Dakota Wheat Pool," Agricultural Economics Reports 23173, North Dakota State University, Department of Agribusiness and Applied Economics.
    8. Richard J. Sexton & Mingxia Zhang, 1996. "A Model of Price Determination for Fresh Produce with Application to California Iceberg Lettuce," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 924-934.
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    Crop Production/Industries; Marketing;

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