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Competitive Behaviour in the International Wheat Market

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  • Freebairn, John W.

Abstract

A model of the organization of the international wheat market is presented (a) to explain historical competitive behaviour in the market and (b) as a framework for analysing the likely effects of changes in market conditions on competitive behaviour. In the model the market is segmented into three interdependent sub-markets. The hard wheat sub-market is characterized by a co-operative duopoly model with Canada as the price leader, with the United States as the usually silent partner, and with a fringe of competitors. The soft wheat and durum wheat sub-markets are characterized by oligopoly models based on imperfect collusion between the three main respective sellers, and with a fringe of competitors. It is found that prices (particularly of hard wheats) are more stable and higher than would be prices formed under free market conditions and there is a greater emphasis on the use of non-price competition. The model indicates the importance of domestic agricultural policies in assuring continued stability in the market.

Suggested Citation

  • Freebairn, John W., 1968. "Competitive Behaviour in the International Wheat Market," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 36(03), pages 1-14, September.
    • Handle: RePEc:ags:remaae:9129
    DOI: 10.22004/ag.econ.9129
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    International Relations/Trade;

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