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Wool Price Stabilisation And Profit Risk For Wool Users

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  • John C. Quiggin

Abstract

It has often been suggested that more stable wool prices would lead to an outward shift in the long-run demand for wool. To assess this claim it is necessary to examine different sources of risk and instability in wool prices and their impact on the risk borne by wool users. A model is presented in which the input and output decisions of a wool processor are related to interactions between the wool and yarn markets. It is concluded that, if fluctuations in final demand or exchange rates are the major sources of instability, the long-run effect of stabilising prices is to increase the risk faced by wool users and reduce that faced by wool growers.
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Suggested Citation

  • John C. Quiggin, 1983. "Wool Price Stabilisation And Profit Risk For Wool Users," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 27(1), pages 31-43, April.
    • Handle: RePEc:bla:ajarec:v:27:y:1983:i:1:p:31-43
    DOI: j.1467-8489.1983.tb00421.x
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    References listed on IDEAS

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    1. Campbell, Rachel & Gardiner, B. & Haszler, Henry, 1980. "On The Hidden Revenue Effects Of Wool Price Stabilisation In Australia: Initial Results," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 24(1), pages 1-15, April.
    2. Baron, David P, 1970. "Price Uncertainty, Utility, and Industry Equilibrium in Pure Competition," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 11(3), pages 463-480, October.
    3. Bob Richardson, 1982. "On The Hidden Revenue Effects Of Wool Price Stabilisation In Australia: Initial Results — A Comment," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 26(1), pages 63-65, April.
    4. Hartman, Richard, 1976. "Factor Demand with Output Price Uncertainty," American Economic Review, American Economic Association, vol. 66(4), pages 675-681, September.
    5. Richardson, Bob, 1982. "On The Hidden Revenue Effects Of Wool Price Stabilisation In Australia: Initial Results - A Comment," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 26(1), pages 1-3, April.
    6. R. Campbell & B. Gardiner & H. Haszler, 1980. "On The Hidden Revenue Effects Of Wool Price Stabilisation In Australia: Initial Results," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 24(1), pages 1-15, April.
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    Cited by:

    1. Hinchy, Mike & Simmons, Phil, 1983. "An Optimal-Control Approach To Stabilising Australian Wool Prices," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 27(1), pages 1-29, April.
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    3. Moir, Brian & Piggott, Roley R., 1991. "Combinations Of Buffer-Stocks And Buffer-Funds For Wool Price Stabilisation In Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 35(1), pages 1-13, April.
    4. Geoff W. Edwards, 1987. "Agricultural Policy Debate: A Survey," The Economic Record, The Economic Society of Australia, vol. 63(2), pages 129-143, June.

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