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The Value of the Initial Payment of the Canadian Wheat Board as a Signaling Device

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  • Lota D. Tamini
  • Jean-Philippe Gervais
  • Bruno Larue

Abstract

This paper analyzes the role of the initial payment used by the Canadian Wheat Board (CWB) in the determination of export prices and sales under the assumption that the CWB has better information about realized yields in Canada than its US competitor. In the separating equilibrium of the game, the initial payment of the CWB is larger than the initial payment under complete information. There exists an incentive under incomplete information to send a signal that realized yields are greater than expected to induce a reduction in the sales of foreign competitors. We illustrate the strategic value of the initial payment for Canadian wheat producers using a numerical simulation. Copyright 2010, Oxford University Press.

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  • Lota D. Tamini & Jean-Philippe Gervais & Bruno Larue, 2010. "The Value of the Initial Payment of the Canadian Wheat Board as a Signaling Device," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 42-55.
  • Handle: RePEc:oup:ajagec:v:92:y:2010:i:1:p:42-55
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    File URL: http://hdl.handle.net/10.1093/ajae/aap012
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    Cited by:

    1. Kerstin Uhl & Oleksandr Perekhozhuk & Thomas Glauben, 2016. "Price Discrimination in Russian Wheat Exports: Evidence from Firm-level Data," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 722-740, September.

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