IDEAS home Printed from https://ideas.repec.org/p/ags/aaea02/19687.html
   My bibliography  Save this paper

Spatial Equilibrium Modeling With Imperfectly Competitive Markets: An Application To Rice Trade

Author

Listed:
  • Chen, Chi-Chung
  • McCarl, Bruce A.
  • Chang, Ching-Cheng
  • Hsu, Shih-Hsun

Abstract

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.

Suggested Citation

  • Chen, Chi-Chung & McCarl, Bruce A. & Chang, Ching-Cheng & Hsu, Shih-Hsun, 2002. "Spatial Equilibrium Modeling With Imperfectly Competitive Markets: An Application To Rice Trade," 2002 Annual meeting, July 28-31, Long Beach, CA 19687, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea02:19687
    DOI: 10.22004/ag.econ.19687
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/19687/files/sp02ch02.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.19687?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
    ---><---

    References listed on IDEAS

    as
    1. Carl H. Nelson & Bruce A. McCarl, 1984. "Including Imperfect Competition in Spatial Equilibrium Models," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 32(1), pages 55-70, March.
    2. Larry J. Martin, 1981. "Quadratic Single And Multi-Commodity Models Of Spatial Equilibrium: A Simplified Exposition," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 29(1), pages 21-48, February.
    3. Yujiro Hayami & Yoshihisa Godo, 1997. "Economics and Politics of Rice Policy in Japan: A Perspective on the Uruguay Round," NBER Chapters, in: Regionalism versus Multilateral Trade Arrangements, pages 371-404, National Bureau of Economic Research, Inc.
    4. Martin K. Perry, 1982. "Oligopoly and Consistent Conjectural Variations," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 197-205, Spring.
    5. Carter, Colin A & MacLaren, Donald, 1997. "Price or Quantity Competition? Oligopolistic Structures in International Commodity Markets," Review of International Economics, Wiley Blackwell, vol. 5(3), pages 373-385, August.
    6. Philip L. Paarlberg & Philip C. Abbott, 1986. "Oligopolistic Behavior by Public Agencies in International Trade: The World Wheat Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(3), pages 528-542.
    7. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    8. Karp, Larry S & Perloff, Jeffrey M, 1989. "Dynamic Oligopoly in the Rice Export Market," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 462-470, August.
    9. Alexander H. Sarris & John Freebairn, 1983. "Endogenous Price Policies and International Wheat Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 214-224.
    10. Colin Carter & Andrew Schmitz, 1979. "Import Tariffs and Price Formation in the World Wheat Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(3), pages 517-522.
    11. Barbara J. Spencer & James A. Brander, 1982. "Tariff Protection and Imperfect Competition," Working Paper 517, Economics Department, Queen's University.
    12. H. Alan Love & Endah Murniningtyas, 1992. "Measuring the Degree of Market Power Exerted by Government Trade Agencies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(3), pages 546-555.
    13. Tsunemasa Kawaguchi & Nobuhiro Suzuki & Harry M. Kaiser, 1997. "A Spatial Equilibrium Model for Imperfectly Competitive Milk Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 851-859.
    14. Alex F. McCalla, 1966. "A Duopoly Model of World Wheat Pricing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 48(3_Part_I), pages 711-727.
    15. Chris M. Alaouze & A. S. Watson & N. H. Sturgess, 1978. "Oligopoly Pricing in the World Wheat Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(2), pages 173-185.
    16. Gail L. Cramer & Eric J. Wailes & Shangnan Shui, 1993. "Impacts of Liberalizing Trade in the World Rice Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(1), pages 219-226.
    17. Bresnahan, Timothy F, 1981. "Duopoly Models with Consistent Conjectures," American Economic Review, American Economic Association, vol. 71(5), pages 934-945, December.
    18. Stephen Enke, 1944. "The Monopsony Case for Tariffs," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 58(2), pages 229-245.
    19. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-1364, November.
    20. Thursby, Marie & Jensen, Richard, 1983. "A conjectural variation approach to strategic tariff equilibria," Journal of International Economics, Elsevier, vol. 14(1-2), pages 145-161, February.
    21. Siamwalla, Ammar & Haykin, Stephen, 1983. "The world rice market: structure, conduct, and performance," Research reports 39, International Food Policy Research Institute (IFPRI).
    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. Miller, Andrew D. & Langley, Suchada V. & Chambers, William, 2003. "Current Issues Affecting Trade And Trade Policy: An Annotated Literature Review," Working Papers 14606, International Agricultural Trade Research Consortium.

    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. Vanzetti, David & Kennedy, John O.S., 1989. "Optimal Retaliation in International Commodity Markets," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 57(01-02-03), pages 1-25, December.
    2. Labson, B. Stephen & Rausser, Gordon C., 1992. "Modeling Phased Reduction of Distortionary Policies in the U.S. Wheat Market Under Alternative Macroeconomic Environments," Staff General Research Papers Archive 502, Iowa State University, Department of Economics.
    3. C. S. C. Sekhar, 2010. "Structure of the World Wheat Market: Some Implications for Strategic Trade Policy?," Journal of Quantitative Economics, The Indian Econometric Society, vol. 8(2), pages 142-158.
    4. 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.
    5. D. MacLaren, 1991. "Agricultural Trade Policy Analysis And International Trade Theory: A Review Of Recent Developments," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(3), pages 250-297, September.
    6. Jeffrey D. McDonald & Daniel A. Sumner, 2003. "The Influence of Commodity Programs on Acreage Response to Market Price: With an Illustration Concerning Rice Policy in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 857-871.
    7. Van der Sluis, Evert, 1988. "A nonlinear multicountry multicommodity spatial equilibrium model with an application," ISU General Staff Papers 1988010108000018153, Iowa State University, Department of Economics.
    8. Daniel H. Pick & Timothy A. Park, 1991. "The Competitive Structure of U.S. Agricultural Exports," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(1), pages 133-141.
    9. Stiegert, Kyle W. & Hamilton, Stephen F., 1998. "Backward Implicit Contracts, Pre-Commitment And Market Power In The International Durum Wheat Market," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20833, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Anania, Giovanni, 2003. "Gains from trade liberalization with imperfectly competitive world markets. A note," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 3(06), pages 1-15.
    11. Jeon, Jong-Pyeong, 1989. "The impacts of policy alternatives and foreign demand fluctuations on the US rice market," ISU General Staff Papers 1989010108000010204, Iowa State University, Department of Economics.
    12. Patterson, Paul M & Abbott, Philip C, 1994. "Further Evidence on Competition in the US Grain Export Trade," Journal of Industrial Economics, Wiley Blackwell, vol. 42(4), pages 429-437, December.
    13. Coyle, Barry & Chambers, Robert G. & Schmitz, Andrew, 1986. "Economic Gains from Agricultural Trade: A Review and Bibliography," Miscellaneous Publications 319990, United States Department of Agriculture, Economic Research Service.
    14. JEFFREY T. La FRANCE & ANDREW SCHMITZ & DAVID ZILBERMAN, 1984. "Small Leading Firms," The Economic Record, The Economic Society of Australia, vol. 60(2), pages 160-164, June.
    15. 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.
    16. Holloway, Garth J., 1995. "Conjectural Variations With Fewer Apologies," Working Papers 225880, University of California, Davis, Department of Agricultural and Resource Economics.
    17. Gilmour, Brad & Fawcett, Peter, 1986. "The Relationship Between American and Canadian Wheat Prices," Working Papers 243885, Agriculture and Agri-Food Canada.
    18. Holloway, Garth J., 1992. "The Representative Firm, Endogenous Output Decisions And Consistent Conjectural Variations In Oligopoly," Working Papers 225876, University of California, Davis, Department of Agricultural and Resource Economics.
    19. Lee, Dae-Seob & Kennedy, P. Lynn, 2002. "A Game Theoretic Analysis Of U.S. Rice Export Policy: The Case Of Japan And Korea," 2002 Annual meeting, July 28-31, Long Beach, CA 19686, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Thursby, Marie C. & Thursby, Jerry G., 1991. "Strategic Trade Theory and Agricultural Markets: An Application to Canadian and U.S. Wheat Exports to Japan," Occasional Papers 233062, Regional Research Project NC-194: Organization and Performance of World Food Systems.

    More about this item

    Keywords

    Marketing;

    Statistics

    Access and download statistics

    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:ags:aaea02:19687. 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    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.