IDEAS home Printed from https://ideas.repec.org/a/ags/ajaeau/22269.html
   My bibliography  Save this article

A Dynamic Analysis Of Us Export Wheat Pricing And Market Shares

Author

Listed:
  • Ahmadi-Esfahani, Fredoun Z.
  • Carter, Colin A.

Abstract

The economics of a higher loan rate to support US wheat prices is analysed. Utilising optimal control theory, a dynamic wheat trade model is developed. The basic premise underlying the model is that the United States finds itself having transient monopoly power in the wheat market. An expression for the optimal pricing policy which maximises the present value of expected profits over the indefinite future is derived. Results from both the theoretical and empirical models demonstrate that the US wheat pricing strategy depends on its costs relative to competitors' costs, the discount rate and the competitors' response function. The main policy implication of the analysis is for the dominant wheat exporting country constantly to seek to lower costs relative to competitors and to maintain a price exceeding unit cost without encouraging competitors' expansion.

Suggested Citation

  • Ahmadi-Esfahani, Fredoun Z. & Carter, Colin A., 1987. "A Dynamic Analysis Of Us Export Wheat Pricing And Market Shares," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 31(3), pages 1-13, December.
    • Handle: RePEc:ags:ajaeau:22269
    DOI: 10.22004/ag.econ.22269
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/22269/files/31030191.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.22269?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
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gaskins, Darius Jr., 1971. "Dynamic limit pricing: Optimal pricing under threat of entry," Journal of Economic Theory, Elsevier, vol. 3(3), pages 306-322, September.
    2. Dunmore, John C., 1985. "International Trade as a Source of Risk and Uncertainty," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 3(1), pages 1-8, February.
    3. Mitchell, Donald O & Duncan, Ronald C, 1987. "Market Behavior of Grains Exporters," The World Bank Research Observer, World Bank, vol. 2(1), pages 3-21, January.
    4. Wilson, William W., 1986. "Proceedings of a Symposium on Competitiveness of U.S. Grains in International Markets," Agricultural Economics Miscellaneous Reports 119582, North Dakota State University, Department of Agribusiness and Applied Economics.
    5. Johnson, S. R. & Womack, Abner W. & Meyers, William H. & Young II, Robert E. & Brandt, Jon, 1985. "Options for the 1985 Farm Bill: An Analysis and Evaluation," FAPRI Staff Reports 244138, Food and Agricultural Policy Research Institute (FAPRI).
    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. Ryan, Timothy J., 1994. "Marketing Australia's Wheat Crop: The Way Ahead," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 62(01), pages 1-15, April.

    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. Flavio Toxvaerd, 2017. "Dynamic limit pricing," RAND Journal of Economics, RAND Corporation, vol. 48(1), pages 281-306, March.
    2. Stephen W. Salant, 1977. "Staving off the backstop: dynamic limit-pricing with a kinked demand curve," International Finance Discussion Papers 110, Board of Governors of the Federal Reserve System (U.S.).
    3. David G. Blanchflower & Neil Millward & Andrew J. Oswald, 1989. "Unionization and Employment Behavior," NBER Working Papers 3180, National Bureau of Economic Research, Inc.
    4. Jean Jaskold Gabszewicz, 1979. "Théories de la concurrence imparfaite : illustrations récentes de thèmes anciens," Working Papers hal-01527449, HAL.
    5. Mehmet E. Karaaslan, 1995. "Identifying Participants in a Price-fixing Conspiracy: Output and Market Share Tests Reexamined," Law and Economics 9503001, University Library of Munich, Germany.
    6. Gautam Gowrisankaran & Thomas J. Holmes, 2000. "Do mergers lead to monopoly in the long run? Results from the dominant firm model," Staff Report 264, Federal Reserve Bank of Minneapolis.
    7. Semmler, Willi & Di Bartolomeo, Giovanni & Minooei Fard, Behnaz & Braga, Joao Paulo, 2022. "Limit pricing and entry game of renewable energy firms into the energy sector," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 179-190.
    8. Yavapolkul, Navin & Gopinath, Munisamy & Gulati, Ashok, 2004. "Post-Uruguay Round price linkages between developed and developing countries," MTID discussion papers 76, International Food Policy Research Institute (IFPRI).
    9. Schankerman, Mark & Pakes, Ariel, 1986. "Estimates of the Value of Patent Rights in European Countries during the Post-1950 Period," Economic Journal, Royal Economic Society, vol. 96(384), pages 1052-1076, December.
    10. Du, Hang & Wei, Lai & Zhu, Qinghua, 2023. "Competition of consumables’ original brand manufacturers and remanufacturers considering the entry of compatible manufacturers," European Journal of Operational Research, Elsevier, vol. 306(2), pages 679-692.
    11. 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.
    12. Sawyer, Malcolm C., 1982. "On the specification of structure-performance relationships," European Economic Review, Elsevier, vol. 17(3), pages 295-306.
    13. Price, Gregory N., 1995. "The determinants of entry for black-owned commercial banks," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(3), pages 289-303.
    14. William E. Kovacic & Carl Shapiro, 2000. "Antitrust Policy: A Century of Economic and Legal Thinking," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 43-60, Winter.
    15. Milde, Hellmuth, 1980. "Potentielle Konkurrenz, Marktzutritt und Limitpreisbildung," Discussion Papers, Series I 150, University of Konstanz, Department of Economics.
    16. Christoph Schenzler & John J. Siegfried & William O. Thweatt, 1992. "The History of the Static Equilibrium Dominant Firm Price Leadership Model," Eastern Economic Journal, Eastern Economic Association, vol. 18(2), pages 171-186, Spring.
    17. Yamawaki, Hideki, 2002. "Price reactions to new competition: A study of US luxury car market, 1986-1997," International Journal of Industrial Organization, Elsevier, vol. 20(1), pages 19-39, January.
    18. Mita Bhattacharya & Jong-Rong Chen, 2009. "Market dynamics and dichotomy: evidence from Taiwanese manufacturing," Applied Economics, Taylor & Francis Journals, vol. 41(17), pages 2169-2179.
    19. Ariel Pakes & Mark Schankerman, 1984. "The Rate of Obsolescence of Patents, Research Gestation Lags, and the Private Rate of Return to Research Resources," NBER Chapters, in: R&D, Patents, and Productivity, pages 73-88, National Bureau of Economic Research, Inc.
    20. Robert Cherry, 2000. "The Dominant Firm Model Revisited," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(1), pages 89-95, February.

    More about this item

    Keywords

    Demand and Price Analysis;

    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:ajaeau:22269. 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/aaresea.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.