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Price dynamics in the Bangladesh rice market: implications for public intervention

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  • Brennan, Donna C.

Abstract

In this paper, the price dynamics of a rice market are examined using dynamic programming techniques. The model is parameterised to the case of Bangladesh and thus represents the situation of a very poor country which has characteristically high price elasticity (due to income effects) and high storage and interest costs. The incentives for private sector storage and its impact on price stability are examined. Various options for public intervention in the storage sector are also explored, including price ceiling schemes and subsidisation of storage costs. Results show that interventions that remove private disincentives (such as storage subsidies) are much cheaper than direct intervention by government, but the impact on the probability distribution of prices is quite different. The effect of trade on the probability distribution of prices is also examined. © 2003 Elsevier Science B.V. All rights reserved.

Suggested Citation

  • Brennan, Donna C., 2003. "Price dynamics in the Bangladesh rice market: implications for public intervention," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 29(1), July.
  • Handle: RePEc:ags:iaaeaj:177986
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    References listed on IDEAS

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    Cited by:

    1. Brian D. Wright, 2012. "International Grain Reserves And Other Instruments to Address Volatility in Grain Markets," World Bank Research Observer, World Bank Group, vol. 27(2), pages 222-260, August.
    2. Dorosh, Paul A. & Childs, Abigail, 2014. "International rice trade and security stocks: Prospects for an expanded Asian international rice reserve:," IFPRI discussion papers 1394, International Food Policy Research Institute (IFPRI).
    3. Christophe Gouel, 2012. "Agricultural Price Instability: A Survey Of Competing Explanations And Remedies," Journal of Economic Surveys, Wiley Blackwell, vol. 26(1), pages 129-156, February.
    4. Christophe Gouel & Sébastien Jean, 2015. "Optimal Food Price Stabilization in a Small Open Developing Country," World Bank Economic Review, World Bank Group, vol. 29(1), pages 72-101.
    5. Athanasiou, George & Karafyllis, Iasson & Kotsios, Stelios, 2008. "Price stabilization using buffer stocks," Journal of Economic Dynamics and Control, Elsevier, vol. 32(4), pages 1212-1235, April.
    6. Gouel, Christophe, 2013. "Optimal food price stabilisation policy," European Economic Review, Elsevier, vol. 57(C), pages 118-134.
    7. Donald F. Larson & Julian Lampietti & Christophe Gouel & Carlo Cafiero & John Roberts, 2014. "Food Security and Storage in the Middle East and North Africa," World Bank Economic Review, World Bank Group, vol. 28(1), pages 48-73.
    8. Christophe Gouel, 2013. "Rules versus Discretion in Food Storage Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(4), pages 1029-1044.
    9. Yu, Yi & Willis, David, 2016. "The Effect of China’s Pork Reserve Program on Pork Price Volatility," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235829, Agricultural and Applied Economics Association.
    10. Liu, Xianglin & Romero-Aguilar, Randall S. & Chen, Shu-Ling & Miranda, Mario J., 2013. "The Global Food Price Crisis and China-World Rice Market Integration: A Spatial-Temporal Rational Expectations Equilibrium Model," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149965, Agricultural and Applied Economics Association.
    11. repec:eee:ecosta:v:4:y:2017:i:c:p:39-56 is not listed on IDEAS
    12. Getnet, Kindie, 2008. "From market liberalization to market development: The need for market institutions in Ethiopia," Economic Systems, Elsevier, vol. 32(3), pages 239-252, September.
    13. Possamai, Janaína Poffo & Pescador, Andresa & Mayerle, Sérgio Fernando & Neiva de Figueiredo, João, 2015. "Optimal commodity price stabilization as a multi-period spatial equilibrium problem: A supernetwork approach with public buffer stocks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 289-310.

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