IDEAS home Printed from https://ideas.repec.org/a/bpj/bjafio/v4y2006i1n6.html
   My bibliography  Save this article

Imperfect Competition and Strategic Trade Theory: Evidence for International Food and Agricultural Markets

Author

Listed:
  • Reimer Jeffrey J

    (Oregon State University)

  • Stiegert Kyle

    (University of Wisconsin-Madison)

Abstract

Strategic trade theory offers a way of conceptualizing and testing for strategic government interventions in imperfectly competitive international markets. This survey critically assesses recent empirical evidence, with a focus on food and agricultural markets. One finding is that while many international markets are characterized by oligopoly, price-cost markups tend to be small, and the potential gains from intervention are modest at best. In turn, empirical work has turned up few examples in which government intervention has been optimal in a strategic trade sense. Nonetheless, governments are found to frequently intervene on behalf of domestic firms and play a major role in shaping the nature of international competition. Suggestions for future research are made.

Suggested Citation

  • Reimer Jeffrey J & Stiegert Kyle, 2006. "Imperfect Competition and Strategic Trade Theory: Evidence for International Food and Agricultural Markets," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 4(1), pages 1-27, September.
    • Handle: RePEc:bpj:bjafio:v:4:y:2006:i:1:n:6
    DOI: 10.2202/1542-0485.1134
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1542-0485.1134
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1542-0485.1134?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hamilton, Stephen F. & Stiegert, Kyle W., 2002. "An empirical test of the rent-shifting hypothesis: the case of state trading enterprises," Journal of International Economics, Elsevier, vol. 58(1), pages 135-157, October.
    2. Neary, J. Peter, 1994. "Cost asymmetries in international subsidy games: Should governments help winners or losers?," Journal of International Economics, Elsevier, vol. 37(3-4), pages 197-218, November.
    3. Horstmann, Ignatius J. & Markusen, James R., 1986. "Up the average cost curve: Inefficient entry and the new protectionism," Journal of International Economics, Elsevier, vol. 20(3-4), pages 225-247, May.
    4. David E. Buschena & Jeffrey M. Perloff, 1991. "The Creation of Dominant Firm Market Power in the Coconut Oil Export Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1000-1008.
    5. Anania, Giovanni & Bohman, Mary & Carter, Colin A., 1991. "U.S. Export Subsidies in Wheat: Strategic Trade Policy or An Expensive Beggar-My-Neighbor tactic?," Working Papers 51148, International Agricultural Trade Research Consortium.
    6. Feenstra, Robert C. & Gagnon, Joseph E. & Knetter, Michael M., 1996. "Market share and exchange rate pass-through in world automobile trade," Journal of International Economics, Elsevier, vol. 40(1-2), pages 187-207, February.
    7. Yumkella, K. K. & Unnevehr, L. J. & Garcia, P., 1994. "Noncompetitive Pricing and Exchange Rate Pass-Through in Selected U.S. and Thai Rice Markets," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(2), pages 406-416, December.
    8. S. Lael Brainard & David Martimort, 1996. "Strategic Trade Policy Design with Asymmetric Information and Public Contracts," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(1), pages 81-105.
    9. W. M. Corden, 1992. "International Trade Theory And Policy," Books, Edward Elgar Publishing, number 104.
    10. Kyle Bagwell & Robert W. Staiger, 2001. "Strategic Trade, Competitive Industries and Agricultural Trade Disputes," Economics and Politics, Wiley Blackwell, vol. 13(2), pages 113-128, July.
    11. Maggi, Giovanni, 1996. "Strategic Trade Policies with Endogenous Mode of Competition," American Economic Review, American Economic Association, vol. 86(1), pages 237-258, March.
    12. Levinsohn, James A., 1989. "Strategic trade policy when firms can invest abroad: When are tariffs and quotas equivalent?," Journal of International Economics, Elsevier, vol. 27(1-2), pages 129-146, August.
    13. Victor D. Norman & Siri Strandenes, 1994. "Deregulation of Scandinavian Airlines: A Case Study of the Oslo-Stockholm Route," NBER Chapters, in: Empirical Studies of Strategic Trade Policy, pages 85-100, National Bureau of Economic Research, Inc.
    14. Deodhar, Satish Y. & Sheldon, Ian M., 1996. "Estimation Of Imperfect Competition In Food Marketing: A Dynamic Analysis Of The German Banana Market," Journal of Food Distribution Research, Food Distribution Research Society, vol. 27(3), pages 1-10, October.
    15. David Genesove & Wallace P. Mullin, 1998. "Testing Static Oligopoly Models: Conduct and Cost in the Sugar Industry, 1890-1914," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 355-377, Summer.
    16. Howard D. Leathers, 2001. "Agricultural Export Subsidies as a Tool of Trade Strategy: Before and after the Federal Agricultural Improvement and Reform Act of 1996," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 209-221.
    17. Giovanni Anania & Mary Bohman & Colin A. Carter, 1992. "United States Export Subsidies in Wheat: Strategic Trade Policy or Expensive Beggar-Thy-Neighbor Tactic?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(3), pages 534-545.
    18. Clougherty, Joseph A., 2002. "Domestic airline concentration: a positive strategic trade analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(3-4), pages 193-203, May.
    19. Qiu, Larry D., 1995. "Why can't countervailing duties deter export subsidization?," Journal of International Economics, Elsevier, vol. 39(3-4), pages 249-272, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paulus, Moritz & Trueby, Johannes & Growitsch, Christian, 2011. "Nations as Strategic Players in Global Commodity Markets: Evidence from World Coal Trade," EWI Working Papers 2011-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    2. Biswajit Dhar, 2007. "Agricultural trade and government intervention - A persepctive from a developing country," STUDIES IN TRADE AND INVESTMENT, in: Studies in Trade and Investment - AGRICULTURAL TRADE - PLANTING THE SEEDS OF REGIONAL LIBERALIZATION IN ASIA, volume 60, pages 211-223, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    3. May, Daniel E., 2013. "PR - Export Instability When International Agricultural Markets Operate Under Oligopoly," 19th Congress, Warsaw, Poland, 2013 345682, International Farm Management Association.
    4. Qianqian Shao & Thorsten Janus & Maarten J. Punt & Justus Wesseler, 2018. "The Conservation Effects of Trade with Imperfect Competition and Biased Policymakers," Agriculture, MDPI, vol. 8(7), pages 1-22, July.
    5. Hayashibara, Masayuki & Ohkawa, Takao & Nomura, Ryoichi & Okamura, Makoto, 2024. "Optimal degree of interagency coordination of subsidy and tariff policies," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 327-336.
    6. Ian M. Sheldon, 2021. "Reflections on a Career as an Industrial Organization and International Economist," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 468-499, June.
    7. Evans, Edward & Ballen, Fredy, 2014. "Assessing the Intensity of Market Competition in the US Papaya Import Market," Journal of Food Distribution Research, Food Distribution Research Society, vol. 45(2), pages 1-13, July.
    8. May, Daniel E., 2011. "Bilateralism in Agriculture when Countries use Distorting Domestic Policies," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114657, European Association of Agricultural Economists.
    9. Evans Edward & H. Ballen Fredy, 2016. "Testing for Oligopsony Power in the US Green Skin Avocado Market," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 14(1), pages 43-50, May.
    10. Davies, Ronald B., 2013. "The silver lining of red tape," Journal of Public Economics, Elsevier, vol. 101(C), pages 68-76.
    11. Daniel Esteban May, 2012. "Addressing biodiversity loss when international markets of agricultural commodities are oligopolistic," Economics and Business Letters, Oviedo University Press, vol. 1(1), pages 53-57.
    12. May, Daniel E., 2011. "Incentives of small countries to participate in a global free trade agreement in agriculture: a theoretical analysis," Economi­a Agraria (Revista Economia Agraria), Agrarian Economist Association (AEA), Chile, vol. 15, pages 1-7.
    13. Pall, Zsombor & Perekhozhuk, Oleksandr & Teuber, Ramona & Glauben, Thomas, 2011. "Wheat trade - does Russia price discriminate across export destinations?," IAMO Forum 2011: Will the "BRICs Decade" Continue? – Prospects for Trade and Growth 15, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
    14. May, Daniel E., 2011. "Incentives of small countries to participate in a global free trade agreement in agriculture: a theoretical analysis," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 15.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Reimer, Jeffrey J. & Stiegert, Kyle W., 2006. "Evidence on Imperfect Competition and Strategic Trade Theory," Staff Paper Series 498, University of Wisconsin, Agricultural and Applied Economics.
    2. Reimer, Jeffrey J. & Steigert, Kyle W., 2006. "Imperfect Competition and Strategic Trade Theory: What Have We Learned?," Working Papers 201528, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    3. Stiegert, Kyle W. & Wang, Shinn-Shyr, 2003. "Imperfect Competition And Strategic Trade Theory: What Have We Learned," Working Papers 14589, International Agricultural Trade Research Consortium.
    4. Hamilton, Stephen F. & Stiegert, Kyle W., 2002. "An empirical test of the rent-shifting hypothesis: the case of state trading enterprises," Journal of International Economics, Elsevier, vol. 58(1), pages 135-157, October.
    5. Fabio Antoniou & Nikos Tsakiris, 2014. "Information and Disclosure in Strategic Trade Policy: Revisited," Journal of Industry, Competition and Trade, Springer, vol. 14(3), pages 415-427, September.
    6. Desai, Mihir A. & Hines Jr., James R., 2008. "Market reactions to export subsidies," Journal of International Economics, Elsevier, vol. 74(2), pages 459-474, March.
    7. Maggi, Giovanni, 1999. "Strategic Trade Policy under Incomplete Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(3), pages 571-594, August.
    8. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455, Elsevier.
    9. Pall, Zsombor & Perekhozhuk, Oleksandr & Teuber, Ramona & Glauben, Thomas, 2011. "Wheat trade - does Russia price discriminate across export destinations?," IAMO Forum 2011: Will the "BRICs Decade" Continue? – Prospects for Trade and Growth 15, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
    10. Dahl, Bruce L. & Johnson, D. Demcey & Wilson, William W. & Gustafson, Cole R., 1995. "Credit Guarantee Programs in International Grain Markets: Background and Issues," Agricultural Economics Reports 23331, North Dakota State University, Department of Agribusiness and Applied Economics.
    11. Praveen Kujal & Juan Ruiz, 2003. "Cost Effectiveness of R&D and the Robustness of Strategic Trade Policy," International Trade 0302001, University Library of Munich, Germany, revised 04 Feb 2003.
    12. Aditya Bhattacharjea, 2002. "Infant Industry Protection Revisited," International Economic Journal, Taylor & Francis Journals, vol. 16(3), pages 115-133.
    13. Takanori Adachi & Michal Fabinger, 2017. "Multi-Dimensional Pass-Through, Incidence, and the Welfare Burden of Taxation in Oligopoly," CIRJE F-Series CIRJE-F-1040, CIRJE, Faculty of Economics, University of Tokyo.
    14. Auriol, Emmanuelle & Biancini, Sara, 2009. "Economic Integration and Investment Incentives in Regulated Industries," IDEI Working Papers 555, Institut d'Économie Industrielle (IDEI), Toulouse.
    15. Myrto Kalouptsidi, 2015. "One State, Many Regions: China's Fragmented Industrial Takeover," 2015 Meeting Papers 1247, Society for Economic Dynamics.
    16. Arghya Ghosh & Souresh Saha, 2008. "Trade Policy in the Presence of Technology Licensing," Review of International Economics, Wiley Blackwell, vol. 16(1), pages 45-68, February.
    17. Takanori Adachi & Michal Fabinger, 2017. "Multi-Dimensional Pass-Through and Welfare Measures under Imperfect Competition," Papers 1702.04967, arXiv.org, revised Dec 2018.
    18. Rodrigo Zeidan & Marcelo Resende, 2009. "Measuring Market Conduct in the Brazilian Cement Industry: A Dynamic Econometric Investigation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(3), pages 231-244, May.
    19. Robert A Ritz, 2024. "Does competition increase pass‐through?," RAND Journal of Economics, RAND Corporation, vol. 55(1), pages 140-165, March.
    20. Satyanarayana, Vidyashankara & Johnson, D. Demcey, 1998. "Credit Guarantee Programs And U.S. Market Share In Selected Wheat Import Markets," Agricultural Economics Reports 23284, North Dakota State University, Department of Agribusiness and Applied Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bjafio:v:4:y:2006:i:1:n:6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyterbrill.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.