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State Trading Enterprises in a Differentiated Environment: The Case of Global Malting Barley Markets

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Author Info
Fengxia Dong () (Center for Agricultural and Rural Development (CARD), Food and Agricultural Policy Research Institute (FAPRI))
Thomas L. Marsh
Kyle W. Stiegert

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Abstract

The lack of transparency in the pricing and operational activities of state trading enterprises (STEs) has caused members of the World Trade Organization to express concern that certain countries' STEs might circumvent Uruguay Round commitments on export subsidies, domestic support, or market access. The purpose of this study is to examine the market structure of the differentiated world malting barley market in which two STEs (the Canadian Wheat Board and the Australian Barley Board) maintain jointly a very large share of the export market. In particular, this study focuses on the exclusive procuring and pricing policies used by both STEs to test if these intra-country mechanisms can generate leadership and shift rent from other exporting countries. A conceptual and empirical framework is also provided to test if STEs set their initial payments at optimal levels. The study suggests that two STEs and other exporting countries were in Cournot competition. While some distortionary impacts from the STE prepayment systems are possible, it does not appear to be a tool that either STE employs. Empirical results from the precommitment stage show that the two STEs did not set their initial payments low enough to maximize their profits.

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Publisher Info
Paper provided by Center for Agricultural and Rural Development (CARD) at Iowa State University in its series Center for Agricultural and Rural Development (CARD) Publications with number 03-wp350.

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Date of creation: Dec 2003
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Handle: RePEc:ias:cpaper:03-wp350

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Related research
Keywords: malting barley; market structure; prepayment system; product differentiation; rent shifting; state trading enterprises (STEs).;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Griffiths, William E. & O'Donnell, Christopher J. & Cruz, Augustina Tan, 1999. "Imposing Regularity Conditions On A System Of Cost And Factor Share Equations," Working Papers 12925, University of New England, School of Economics. [Downloadable!]
  2. 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. [Downloadable!] (restricted)
    Other versions:
  3. Gasmi, F & Laffont, J J & Vuong, Q, 1992. "Econometric Analysis of Collusive Behavior in a Soft-Drink Market," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 1(2), pages 277-311, Summer.
    Other versions:
  4. Geweke, John, 1986. "Exact Inference in the Inequality Constrained Normal Linear Regression Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(2), pages 127-41, April. [Downloadable!] (restricted)
  5. Paul Krugman, 1986. "Industrial Organization and International Trade," NBER Working Papers 1957, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Schmitz, Troy G. & Koo, Won W., 1996. "An Economic Analysis Of International Feed And Malting Barley Markets: An Econometric Spatial Oligopolistic Approach," Agricultural Economics Reports 23286, North Dakota State University, Department of Agribusiness and Applied Economics. [Downloadable!]
  7. Chib, Siddhartha & Greenberg, Edward, 1996. "Markov Chain Monte Carlo Simulation Methods in Econometrics," Econometric Theory, Cambridge University Press, vol. 12(03), pages 409-431, August. [Downloadable!]
  8. Eaton, Jonathan & Grossman, Gene M, 1986. "Optimal Trade and Industrial Policy under Oligopoly," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 383-406, May. [Downloadable!] (restricted)
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  9. Fershtman, Chaim & Judd, Kenneth L, 1987. "Equilibrium Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 77(5), pages 927-40, December. [Downloadable!] (restricted)
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  10. repec:cup:etheor:v:12:y:1996:i:3:p:409-31 is not listed on IDEAS
  11. Schmitz, Troy G. & Gray, Richard, 2000. "State Trading Enterprises And Revenue Gains From Market Power: The Case Of Barley Marketing And The Canadian Wheat Board," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(02), December. [Downloadable!]
  12. Richard C. Bishop & Matthew T. Holt, 2002. "A semiflexible normalized quadratic inverse demand system: an application to the price formation of fish," Empirical Economics, Springer, vol. 27(1), pages 23-47. [Downloadable!] (restricted)
  13. Hamilton, Stephen F & Stiegert, Kyle, 2000. "Vertical Coordination, Antitrust Law, and International Trade," Journal of Law & Economics, University of Chicago Press, vol. 43(1), pages 143-56, April.
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Cited by:
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  1. 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. [Downloadable!]
  2. 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. [Downloadable!]
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