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Imperfect Competition and Strategic Trade Theory: Evidence for International Food and Agricultural Markets

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  • Reimer Jeffrey J

    (Oregon State University)

  • Stiegert Kyle

    (University of Wisconsin-Madison)

Abstract

Strategic trade theory offers a way of conceptualizing and testing for strategic government interventions in imperfectly competitive international markets. This survey critically assesses recent empirical evidence, with a focus on food and agricultural markets. One finding is that while many international markets are characterized by oligopoly, price-cost markups tend to be small, and the potential gains from intervention are modest at best. In turn, empirical work has turned up few examples in which government intervention has been optimal in a strategic trade sense. Nonetheless, governments are found to frequently intervene on behalf of domestic firms and play a major role in shaping the nature of international competition. Suggestions for future research are made.

Suggested Citation

  • Reimer Jeffrey J & Stiegert Kyle, 2006. "Imperfect Competition and Strategic Trade Theory: Evidence for International Food and Agricultural Markets," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 4(1), pages 1-27, September.
    • Handle: RePEc:bpj:bjafio:v:4:y:2006:i:1:n:6
    DOI: 10.2202/1542-0485.1134
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    References listed on IDEAS

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    3. Hayashibara, Masayuki & Ohkawa, Takao & Nomura, Ryoichi & Okamura, Makoto, 2024. "Optimal degree of interagency coordination of subsidy and tariff policies," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 327-336.
    4. Paulus, Moritz & Trueby, Johannes & Growitsch, Christian, 2011. "Nations as Strategic Players in Global Commodity Markets: Evidence from World Coal Trade," EWI Working Papers 2011-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    5. Davies, Ronald B., 2013. "The silver lining of red tape," Journal of Public Economics, Elsevier, vol. 101(C), pages 68-76.
    6. May, Daniel E., 2013. "PR - Export Instability When International Agricultural Markets Operate Under Oligopoly," 19th Congress, Warsaw, Poland, 2013 345682, International Farm Management Association.
    7. Evans, Edward & Ballen, Fredy, 2014. "Assessing the Intensity of Market Competition in the US Papaya Import Market," Journal of Food Distribution Research, Food Distribution Research Society, vol. 45(2), pages 1-13, July.
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    9. Qianqian Shao & Thorsten Janus & Maarten J. Punt & Justus Wesseler, 2018. "The Conservation Effects of Trade with Imperfect Competition and Biased Policymakers," Agriculture, MDPI, vol. 8(7), pages 1-22, July.
    10. Daniel Esteban May, 2012. "Addressing biodiversity loss when international markets of agricultural commodities are oligopolistic," Economics and Business Letters, Oviedo University Press, vol. 1(1), pages 53-57.
    11. May, Daniel E., 2011. "Incentives of small countries to participate in a global free trade agreement in agriculture: a theoretical analysis," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 15.
    12. May, Daniel E., 2011. "Bilateralism in Agriculture when Countries use Distorting Domestic Policies," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114657, European Association of Agricultural Economists.
    13. Biswajit Dhar, 2007. "Agricultural trade and government intervention - A persepctive from a developing country," STUDIES IN TRADE AND INVESTMENT, in: Studies in Trade and Investment - AGRICULTURAL TRADE - PLANTING THE SEEDS OF REGIONAL LIBERALIZATION IN ASIA, volume 60, pages 211-223, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    14. May, Daniel E., 2011. "Incentives of small countries to participate in a global free trade agreement in agriculture: a theoretical analysis," Economi­a Agraria (Revista Economia Agraria), Agrarian Economist Association (AEA), Chile, vol. 15, pages 1-7.

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