Philip C. Abbott

Oligopolistic Behavior by Public Agencies in International Trade: The World Wheat Market

A model of the world wheat market is presented which treats public policies as endogenous. The oligopolistic nature of international wheat trade is captured by assuming policy makers form conjectures on the slope of the excess demand function they face and use that information to determine domestic and trade policies. The policies reflect differing influences of political interest groups. A U.S. crop shortfall scenario illustrates the different results with endogenous policies compared to the traditional model.

Modeling International Grain Trade with Government Controlled Markets

Government interventions have a pervasive impact on international grain trade, yet models of that trade treat the role of government as an exogenous influence. A model endogenizing government is presented as an alternative to spatial equilibrium trade models. That model is also used to interpret parameters in a net import demand model and to argue that the effect of international prices and production on trade often will be smaller than what is derived from domestic supply and demand equations. Econometric evidence supporting that contention is presented for trade in wheat and feed grains by thirty-three countries.

Development Dimensions of High Food Prices

Measures were taken by many developing country governments to mitigate consequences of high international agricultural commodity prices from mid 2006 until mid 2008, and to block their transmission to domestic markets, with varying degrees of success and cost. A significant international response has focused on emergency relief and renewed efforts to invest in agricultural development. This paper describes and contrasts the approaches taken by national governments versus international organizations and donors to respond to this food crisis, and their consequences. It also explores approaches already underway to enhance aid effectiveness and achieve more rapid agricultural development for smallholder farmers, identifying potential and past roadblocks.

Targeted Agricultural Export Subsidies and Social Welfare

Most agricultural export subsidies are targeted to specific countries. This paper demonstrates that in a standard general equilibrium model of international trade, a small targeted subsidy increase the welfare of the subsidizing country by exploiting differences in price responsiveness of demand relationships of importers. A single-product spatial equilibrium model then is used to show that targeted export subsidies can be used to increase the subsidizing countrys welfare by exploiting transportation cost differences and the elasticity of excess supply of competitors or of markets supplied by competitors through subsidization of shared markets. In addition, an empirical model of the world wheat market is used to illustrate the theoretical conclusions.

Tariff rate quotas: structural and stability impacts in growing markets

This paper examines several aspects of tariff rate quotas (TRQ) as adopted during tariffication of agricultural policies under the Uruguay Round of GATT. Quota rents and non-tariff barrier effects may remain under TRQs, contrary to the objectives of the tariffication process. Further, price stability impacts of a TRQ are more complex than those for either tariffs or quotas, and under certain circumstances TRQs may be more stabilizing than either case, since TRQs truncate domestic production distributions much like price bands policies. This complexity results from the possibility of regime switching, and may reflect behavior under either a tariff, a quota, or a combination of cases. A TRQ policy may affect the timing of import decisions based on incentives created under quota allocation procedures envisioned for this institution. It may also allow increased imports as demand growth occurs because the quota is not necessarily a binding constraint. This means the above quota tariff is the critical policy instrument. An empirical study of Philippines pork imports illustrates these issues.

Further Evidence on Competition in the US Grain Export Trade

This study analyzes the relationship between export market structure and the pricing behavior of U.S. grain exporting firms. A generalized Cournot model is estimated by two-stage least squares using pooled data sets for U.S. wheat and corn exports. The cross-sectional units correspond to foreign country destinations. Discriminatory export pricing behavior was found to be significantly related to export seller concentration, U.S. market share, total export volume, and import market size. Yet, the estimated coefficients linking these market structure variables to the export price markup were relatively small in magnitude, suggesting little quantitative impact from market power. Copyright 1994 by Blackwell Publishing Ltd.

TARIFF RATE QUOTA IMPLEMENTATION AND ADMINISTRATION BY DEVELOPING COUNTRIES

Tariff rate quota administration and implementation are empirically evaluated for the fourteen developing countries notifying the WTO of the use of TRQs. FAO trade data, UNCTAD data on applied tariffs and the WTO notifications permit us to assess underfill of quotas, discrimination among exporters, use of state trading as an implementation mechanism, and the extent of protection under these TRQs. Substantial liberalization was found, generally due to use of low MFN tariffs rather than through TRQs permitting greater market access. High tariff bindings and endogenous quotas allow these countries to pursue flexible trade regimes within their WTO commitments.

Implications of Game Theory for International Agricultural Trade

This session celebrates the Nobel Prize recognizing contributions of game theory to economic analysis. It is especially appropriate that international trade be included, since both theory and practice in this area have been revolutionized as a consequence of issues game theory addresses. The New International Trade Theory evolved to deal with product differentiation, economies of scale, and imperfect competition (Helpman and Krugman). Ethier observed that this revolution was driven by the failure of existing models-the HeckscherOhlin-Samuelson framework-to account for

Changing Agricultural Comparative Advantage

Special circumstances in the agricultural sector have limited the use of comparative advantage in addressing the planners dilemma of allocating investment between industry and agriculture and in examining the doctrine of food selfsufficiency. A three-factor model of agricultural trade, extending earlier models, is used to address some of these special circumstances and to formulate a theory of agricultural comparative advantage under changing economic conditions. Emphasis is placed on the short-run fixity of sector-specific capital stocks, the role of qualitative differences in land (natural resource) endowments, and on non-homothetic preferences. In addition to insights on agricultural comparative advantage, implications for project evaluation are considered.

Welfare effects of tied food aid

Abstract An important part of the overall U.S. aid program is Public Law 480 food aid. The design of the program seeks to satisfy numerous and often conflicting objectives. Several constraints have been placed on the use by recipient countries of that aid to insure that the intentions of the program are achieved. This paper examines the implications for recipient country welfare of both the traditional and the proposed restrictions on PL480 aid. It also seeks to clarify the interpretation of empirical work on the effects of this aid. It is shown that the net value of such commodity tied aid is simply the grant component of the subsidized sale and may easily be realized by substituting food aid imports for commercial imports. Restrictions which prevent aid recipients from doing so are costly to the recipient and could lead even to immuserization. Empirical evidence obtained by others is consistent with the notion that such restrictions are circumvented, where possible, by food aid recipients. The results presented indicate that a ‘Schultzian’ disincentive effect is characteristic of a closed economy. Typical interventions on the part of recipient country governments do not effectively reclose the economy. Hence, open economy models are more appropriate frameworks for evaluating the effects of PL480 aid.