Spatial Equilibrium Modeling With Imperfectly Competitive Markets: An Application To Rice Trade
A general imperfect competition spatial equilibrium model is developed to estimate the trading country behaviors in the international rice market using a conjectural variation approach. Such a model allows the possibility of an imperfect competitive market to exit on both the export and import sides without any assumption of market structure. The empirical results show that the major exporting countries, Thailand, Vietnam, and the U.S. acted as high degree of imperfect competitors(or oligopolies) while Pakistan acted as a lower degree of imperfect competitor. The importing countries such as Japan, the Philippines, Europe, Brazil, and the former USSR behaved as high degree of imperfect competitors (or oligopsonies). The empirical results also show that there are welfare gains of $1,492 million when all trading countries comply with the free trade agreement.
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National Bureau of Economic Research, Inc.
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