IDEAS home Printed from
   My bibliography  Save this article

Strategic Interaction of International Markets: An Application to the Dairy Market


  • Vargas Andrés José



This paper studies the relation between the government´s objectives to sustain income in the dairy sector and the possibility to capture rent in the world market. To do this, two different governmental policies were considered: a direct export subsidy and a price discrimination scheme. These policies were analyzed under strategic and non-strategic scenarios. The results indicate that when there is non-strategic interaction and there exists a low opportunity cost of public funds, the two policies have the same effect on total welfare and lead to the same wealth transfer to producers. When there is a strategic interaction among producers, the price discrimination scheme leads to higher consumer welfare but lower producer benefit, being the net result on total welfare determined by the relative weights of the agents in the welfare function. From the producers´ point of view, the export subsidy is preferred to the price discrimination scheme when there is imperfect competition in the world market.

Suggested Citation

  • Vargas Andrés José, 2001. "Strategic Interaction of International Markets: An Application to the Dairy Market," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE, September.
  • Handle: RePEc:col:000090:003526

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Russell Cooper & Raymond Riezman, 2013. "Uncertainty and the Choice of Trade Policy in Oligopolistic Industries," World Scientific Book Chapters,in: International Trade Agreements and Political Economy, chapter 16, pages 287-298 World Scientific Publishing Co. Pte. Ltd..
    2. Bouamra-Mechemache, Z. & Chavas, J.P. & Cox, T. & Réquillart, V., 2001. "Price discrimination and EU dairy policy : an economic evaluation of policy options," Economics Working Paper Archive (Toulouse) 23, French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse).
    3. Zohra Bouamra Mechemache & Vincent Réquillart, 1999. "Policy Reform in the European Union Dairy Sector: Effects on Markets and Welfare," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(5), pages 105-114, December.
    Full references (including those not matched with items on IDEAS)

    More about this item


    dairy markets; strategic trade policy;

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation


    Access and download statistics


    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:col:000090:003526. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Universidad De Los Andes-Cede). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.