Structural Alternatives for Price Stabilization in Commodity Markets

The article is devoted to the development of approaches to state regulation of commodity markets in order to stabilize prices during periods of price shocks. The authors systematize the measures of state regulation used in Russian and world practice to overcome price shocks, including foreign trade restrictions, fiscal measures, commodity and purchasing interventions. Particular attention is paid to the policy of development of the exchange segment of commodity markets as a potentially pro-competitive tool for improving market mechanisms, the emphasis on which is made by the FAS of Russia as part of achieving medium-term objectives of competition policy, trying to form a system of national price indicators. Following the ideology of regulatory impact assessment, the authors identify six key criteria for comparing alternatives of market regulation, including price stability, reliability of supply, minimization of costs for the state budget and transaction costs for market participants, support for domestic industries, and technological capabilities. According to these criteria, the authors compare ten main alternatives. They come to the conclusion that the establishment of a system of price indicators that allow for the prompt and reasonable application of antitrust response measures shows a good balance of benefits and costs, but these indicators should not be universally reduced to exchange quotations. Exchange pricing alone does not necessarily ensure price stability, can create additional costs for market participants by disrupting long-term supply chains, and is not always justified by the characteristics of commodities. Alternative mechanisms - damper, interventions, export bans - may be better in terms of rapid stabilization, but they bring negative effects in terms of incentives for producers and/or burdens on the state budget.