GTAP Resources: Resource Display
| GTAP Resource #3303 |
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"Estimating the Impacts of Agricultural Export Restrictions in the Global Rice Market" by Chen, Yi-Chieh and Ching-Cheng Chang Abstract Different from the factors behind the global food crisis, export restrictions imposed by the exporting countries are considered to be a major factor for the dramatic increase in global rice prices in the early 2008. In order to disentangle the causes and effects, this study conducts a policy simulation analysis to compute the changes in global rice prices from the imposition of export restrictions. The analysis is based on a spatial equilibrium model and the application of conjectural variations. The model estimates asymmetric price distortions caused by government trade intervention measures in both exporting and importing countries. To examine the implications of a trade policy change, we make a simplifying assumption that all exporting and importing countries trade the same type and quality of a commodity. With homogeneous goods, all trading agencies can be coordinated as one single firm in order to strengthen their profit positions while facing foreign competitions. Collecting the first order conditions, the profit and net gain from trade maximization problem for all importers and exporters can be re-formulated into a net social payoff maximization problem adjusted for governments¡¦ trade distorting measures. Three scenarios are simulated. First, export bans are imposed by major exporting countries. Second, if an export cartel organization of rice exporting countries is established. Third, no country intervenes in the global rice market. Our preliminary results show that due the highly inelastic demand and supply in the global rice market prices facing the rest of the world increase significantly as a result of the export restriction. Consumer welfare declines, but producer profits increase. The net decline in economic welfare is 0.08% of the base period. |
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- Agricultural policies - Asia (East) - Oceania - European Union - North America - South America |
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Last Modified: 9/15/2023 1:05:45 PM
