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Price Bands and Buffer Funds

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  • JOHN C. QUIGGIN
  • JOCK R. ANDERSON

Abstract

Price‐band stabilization schemes are widely used although they have generally been regarded as second‐best options. In this paper, it is shown that a class of control problems with plausible social welfare functions yields price‐band stabilization as the optimal solution. Thus the proponents of price‐band schemes need not be regarded as satisficers.

Suggested Citation

  • John C. Quiggin & Jock R. Anderson, 1981. "Price Bands and Buffer Funds," The Economic Record, The Economic Society of Australia, vol. 57(1), pages 67-73, March.
    • Handle: RePEc:bla:ecorec:v:57:y:1981:i:1:p:67-73
    DOI: 10.1111/j.1475-4932.1981.tb01701.x
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    References listed on IDEAS

    as
    1. John C. Quiggin & Jock R. Anderson, 1979. "Stabilisation And Risk Reduction In Australian Agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 23(3), pages 191-206, December.
    2. Just, Richard & Lutz, Ernst & Schmitz, Andrew & Turnovsky, Stephen, 1978. "The distribution of welfare gains from price stabilization : An international perspective," Journal of International Economics, Elsevier, vol. 8(4), pages 551-563, November.
    3. C. Robert Taylor & Hovav Talpaz, 1979. "Approximately Optimal Carryover Levels for Wheat in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(1), pages 32-40.
    4. Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
    5. Hadar, Josef & Russell, William R, 1969. "Rules for Ordering Uncertain Prospects," American Economic Review, American Economic Association, vol. 59(1), pages 25-34, March.
    6. Coes, Donald V, 1977. "Firm Output and Changes in Uncertainty," American Economic Review, American Economic Association, vol. 67(2), pages 249-251, March.
    7. Massell, Benton F, 1970. "Some Welfare Implications of International Price Stabilization," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 404-417, March-Apr.
    8. Panos A. Konandreas & Andrew Schmitz, 1978. "Welfare Implications of Grain Price Stabilization: Some Empirical Evidence for the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(1), pages 74-84.
    9. Richard E. Just, 1975. "Risk Response Models and Their Use in Agricultural Policy Evaluation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(5), pages 836-843.
    10. Wright, Brian D, 1979. "The Effects of Ideal Production Stabilization: A Welfare Analysis Under Rational Behavior," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 1011-1033, October.
    11. Gardner, Bruce, 1979. "Robust Stabilization Policies for International Commodity Agreements," American Economic Review, American Economic Association, vol. 69(2), pages 169-172, May.
    12. Benton F. Massell, 1969. "Price Stabilization and Welfare," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 83(2), pages 284-298.
    13. Shlomo Reutlinger, 1976. "A Simulation Model for Evaluating Worldwide Buffer Stocks of Wheat," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(1), pages 1-12.
    14. Kenneth J. Arrow & Robert C. Lind, 1974. "Uncertainty and the Evaluation of Public Investment Decisions," Palgrave Macmillan Books, in: Chennat Gopalakrishnan (ed.), Classic Papers in Natural Resource Economics, chapter 3, pages 54-75, Palgrave Macmillan.
    15. Turnovsky, Stephen J & Shalit, Haim & Schmitz, Andrew, 1980. "Consumer's Surplus, Price Instability, and Consumer Welfare," Econometrica, Econometric Society, vol. 48(1), pages 135-152, January.
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    Cited by:

    1. Holt, Matthew T., 1989. "Risk, Rational Expectations, and Price Stabilization in the U.S. Corn Market," Staff Papers 200480, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    2. Anderson, Jock R., 2003. "Risk in rural development: challenges for managers and policy makers," Agricultural Systems, Elsevier, vol. 75(2-3), pages 161-197.
    3. John C. Quiggin, 1991. "Contradictory Predictions On Supply Response Under Stabilization: A Reconciliation," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 35(3), pages 285-294, December.
    4. Pinckney, Thomas C., 1988. "Storage, trade, and price policy under production instability: maize in Kenya," Research reports 71, International Food Policy Research Institute (IFPRI).
    5. Chen, Li-Ju & Hu, Shih-Wen & Wang, Vey & Wen, Jiandong & Ye, Chusheng, 2014. "The effects of purchasing and price subsidy policies for agricultural products under target zones," Economic Modelling, Elsevier, vol. 43(C), pages 439-447.
    6. Gardner, Bruce, 1981. "Analysis of Grain Reserves: Lessons from Policy Research," AAEA Miscellaneous Paper Archive 337335, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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