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China s Agricultural Price Control Policy and its Price and Welfare Implications: The Case of Soybean

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  • Wang, W.
  • Wei, L.

Abstract

Based on the research of Thompson et al. (2002), this paper developed a nonlinear commodity market model to analyze the impacts of China s soybean price control policy on price and welfare. A structural model of China soybean economy and its links to the rest of the world is established to analyze the impacts of policy on the variance of domestic price. Also, a Monte Carlo simulation is adopted to evaluate the domestic welfare change and its distributional effects. Results showed that the policy failed to reduce volatility of domestic price. Its stabilizing effects were offset by increases in world volatility due to the high degree of integration between domestic and international market. An inverse U-type relationship appeared between the price transmission elasticity and the domestic price volatility. The policy led to a net welfare increase to producers in China and a net welfare gain in exporting countries at the expense of loss of consumer welfare and huge budgetary costs. Acknowledgement : My deepest gratitude goes first and foremost to Professor Longbao Wei, my tutor, for his constant encouragement and guidance. He has walked me through all the stages of the writing of this thesis. Second, I would like to express my heartfelt gratitude to my friends and my fellow classmates who gave me their help and time in listening to me and helping me work out my problems during the difficult course of the thesis. Last my thanks would go to my beloved family for their loving considerations and great confidence in me.

Suggested Citation

  • Wang, W. & Wei, L., 2018. "China s Agricultural Price Control Policy and its Price and Welfare Implications: The Case of Soybean," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277342, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae18:277342
    DOI: 10.22004/ag.econ.277342
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