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Some Circumstances In Which Price Stabilization By The Wool Commission Reduces Incomes

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  • Clement A. Tisdell

Abstract

Stabilization of wool prices (which is partially achieved by the Wool Commission) may reduce the average annual net income (surplus) of growers and also of manufacturers of wool. The argument that the surplus of growers may be reduced is based upon Massell's extension of Oi's hypothesis. The possibility of falls in the surplus of manufacturers if wool prices are stabilized has a different basis. If wool prices are stabilized by buffer stocks, manufacturers find that their supplies are more variable than in the absence of controls. Consequently, they experience greater average annual cost if their marginal operating costs are increasing. Unless there are substantial revenue gains to processors, their surplus falls. The argument is also applicable to buffer stock schemes for other primary products.
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  • Clement A. Tisdell, 1972. "Some Circumstances In Which Price Stabilization By The Wool Commission Reduces Incomes," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 16(2), pages 94-101, August.
    • Handle: RePEc:bla:ajarec:v:16:y:1972:i:2:p:94-101
    DOI: j.1467-8489.1972.tb00093.x
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    1. Powell, Alan A., 1960. "Production And Income Uncertainty In The Wool Industry: An Aggregative Approach," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 4(1), pages 1-11, July.
    2. A. A. Powell & K. O. Campbell, 1962. "Revenue Implications Of A Buffer‐Stock Scheme With An Uncertain Demand Schedule," The Economic Record, The Economic Society of Australia, vol. 38(83), pages 373-385, September.
    3. Benton F. Massell, 1969. "Price Stabilization and Welfare," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 83(2), pages 284-298.
    4. Frederick V. Waugh, 1944. "Does the Consumer Benefit from Price Instability?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 58(4), pages 602-614.
    5. Tisdell, Clem, 1970. "Price Instability and Average Profit," Oxford Economic Papers, Oxford University Press, vol. 22(1), pages 1-12, March.
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    1. Campbell, Rachel & Gardiner, B. & Haszler, Henry, 1980. "On The Hidden Revenue Effects Of Wool Price Stabilisation In Australia: Initial Results," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 24(1), pages 1-15, April.
    2. Schmitz Andrew, 2020. "Commodity Storage, Price Stabilization, and Food Security," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 18(1), pages 1-2, January.
    3. Houck, James P., 1973. "Some Aspects Of Income Stabilization For Primary Producers," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 17(3), pages 1-16, December.
    4. Kennedy P. Lynn & Schmitz Andrew & van Kooten G. Cornelis, 2020. "The Role of Storage and Trade in Food Security," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 18(1), pages 1-13, January.

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