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Market Power in International Commodity Trade: The Case of Coffee

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  • Mitsuru Igami

Abstract

type="main"> This paper studies the impact of market power on international commodity prices. I use a standard oligopoly model and exploit historical variations in the structure of the international coffee bean market to assess the impact of a cartel treaty on coffee prices and its global welfare consequences. The results suggest that the International Coffee Agreement (ICA, 1965–89) raised its price by 75% above the Cournot-competitive level, annually transferring approximately $12 billion from consumers to exporting countries, and its lapse in 1989 explains four-fifths of the subsequent price decline, that is, the ‘coffee crisis.’

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  • Mitsuru Igami, 2015. "Market Power in International Commodity Trade: The Case of Coffee," Journal of Industrial Economics, Wiley Blackwell, vol. 63(2), pages 225-248, June.
  • Handle: RePEc:bla:jindec:v:63:y:2015:i:2:p:225-248
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    References listed on IDEAS

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    3. Covindassamy, Genevre & Robe, Michel A. & Wallen, Jonathan, 2018. "Sugar With Your Coffee?: Financials, Fundamentals, and Soft Price Uncertainty," IDB Publications (Working Papers) 8588, Inter-American Development Bank.
    4. Gabriel Angarita Tovar, 2017. "Choques de precios y elecciones: el café y la democracia en Colombia," Documentos CEDE 015608, Universidad de los Andes – Facultad de Economía – CEDE.
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    6. Robert Clark & Decio Coviello & Jean-Fran�ois Gauthier & Art Shneyerov, 2018. "Bid Rigging and Entry Deterrence in Public Procurement: Evidence from an Investigation into Collusion and Corruption in Quebec," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 34(3), pages 301-363.

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