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Heterogeneous quality in the international trade of wheat

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  • Larue, Bruno

Abstract

This study analyzes the implications of heterogeneous quality in the international wheat market, and attempts to explain the decline in U.S. wheat exports between 1980-1986. Theoretical models are used to determine the effects of heterogeneous quality on the behavior of importers and exporters. Two approaches are used to model quality. The characteristic approach is used in Chapters Three, Four, and Five. Chapter Six is based on the assumption that importers have a reservation quality level or threshold. The former approach is adequate to investigate the effects of changes in characteristics such as the percentage of foreign material or dockage, while the latter approach better suits the specific nature of characteristics such as protein content;The effects of deterministic changes in quality and of quality uncertainty on consumption and production decisions are analyzed. When importers do not have full information about quality at the time of purchase, they use the reputation of the firm to make their decision. The reputation of the firm is modeled using two approaches. In addition, different types of trade barriers are compared when importers are assumed to have a reservation level of quality.

Suggested Citation

  • Larue, Bruno, 1988. "Heterogeneous quality in the international trade of wheat," ISU General Staff Papers 1988010108000010689, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:1988010108000010689
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    References listed on IDEAS

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    1. Young, Leslie, 1980. "Optimal revenue-raising trade restrictions under uncertainty," Journal of International Economics, Elsevier, vol. 10(3), pages 425-439, August.
    2. Leslie Young & James E. Anderson, 1982. "Risk Aversion and Optimal Trade Restrictions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(2), pages 291-305.
    3. Young, Leslie & Kemp, Murray C, 1982. "On the Optimal Stabilization of Internal Producers' Prices in International Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(1), pages 123-141, February.
    4. Leslie Young & James E. Anderson, 1980. "The Optimal Policies for Restricting Trade under Uncertainty," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(5), pages 927-932.
    5. Young, Leslie, 1982. "Quantity controls vs. expenditure controls in international trade under uncertainty," Journal of International Economics, Elsevier, vol. 12(1-2), pages 143-163, February.
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