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An econometric analysis of market power in Azerbaijani wheat market: Evidence from Kazakhstan and Russia

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  • Gafarova, Gulmira
  • Perekhozhuk, Oleksandr
  • Glauben, Thomas

Abstract

Azerbaijan is a net-importer of wheat with average self-sufficiency ratio of 55%. In order to meet the domestic needs completely, Azerbaijan imports wheat mainly from Kazakhstan and Russia. The objective of this study is to investigate the extent of market power exercised by the Kazakh and Russian exporters in Azerbaijani wheat import market. Toward this aim, we apply the Residual Demand Elasticity approach, and fit the model with monthly time-series data covering the period from January 2004 to December 2013. Total export quantity of an exporting country and population of an importing country are selected as excluded variables in this analysis. The empirical results demonstrate that the Russian exporters exercise market power in Azerbaijani wheat market, but the Kazakh exporters face perfect competition. Moreover, we argue that the Ukrainian exporters are able to constraint both Kazakh and Russian exporters’ market powers in Azerbaijani wheat market.

Suggested Citation

  • Gafarova, Gulmira & Perekhozhuk, Oleksandr & Glauben, Thomas, 2015. "An econometric analysis of market power in Azerbaijani wheat market: Evidence from Kazakhstan and Russia," 2015 Conference, August 9-14, 2015, Milan, Italy 211642, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae15:211642
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    File URL: http://ageconsearch.umn.edu/record/211642/files/Gafarova-An%20econometric%20analysis%20of%20market%20power%20in%20Azerbaijani%20wheat%20market-756.pdf
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    References listed on IDEAS

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    1. Glauben, Thomas & Imamverdiyev, Nizami & Perekhozhuk, Oleksandr & Prehn, Sören, 2014. "Competitive Structure of Kazakhstan, Russia and Ukraine in World Wheat Market: Gravity Model Approach," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182949, European Association of Agricultural Economists.
    2. Carter, Colin A. & MacLaren, Donald & Yilmaz, Alper, 1999. "How Competitive Is The World Wheat Market?," Working Papers 11973, University of California, Davis, Department of Agricultural and Resource Economics.
    3. Gafarova, Gulmira & Perekhozhuk, Oleksandr & Glauben, Thomas, 2015. "Price Discrimination And Pricing-To-Market Behavior Of Black Sea Region Wheat Exporters," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 47(03), pages 287-316, August.
    4. Götz, Linde & Glauben, Thomas & Brümmer, Bernhard, 2013. "Wheat export restrictions and domestic market effects in Russia and Ukraine during the food crisis," Food Policy, Elsevier, vol. 38(C), pages 214-226.
    5. Goldberg, Pinelopi Koujianou & Knetter, Michael M., 1999. "Measuring the intensity of competition in export markets," Journal of International Economics, Elsevier, vol. 47(1), pages 27-60, February.
    6. Baker, Jonathan B. & Bresnahan, Timothy F., 1988. "Estimating the residual demand curve facing a single firm," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 283-300.
    7. Reed, Michael R. & Saghaian, Sayed H., 2004. "Measuring the Intensity of Competition in the Japanese Beef Market," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(1), pages 1-9, April.
    8. Zsombor Pall & Oleksandr Perekhozhuk & Thomas Glauben & Sören Prehn & Ramona Teuber, 2014. "Residual demand measures of market power of Russian wheat exporters," Agricultural Economics, International Association of Agricultural Economists, vol. 45(3), pages 381-391, May.
    9. Jeonghoi Kim, 2010. "Recent Trends in Export Restrictions," OECD Trade Policy Papers 101, OECD Publishing.
    10. Marie‐Hélène Felt & Jean‐Philippe Gervais & Bruno Larue, 2011. "Market power and import bans: the case of Japanese pork imports," Agribusiness, John Wiley & Sons, Ltd., vol. 27(1), pages 47-61, Winter.
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    Keywords

    Crop Production/Industries;

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