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Optimal commodity price stabilization as a multi-period spatial equilibrium problem: A supernetwork approach with public buffer stocks

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  • Possamai, Janaína Poffo
  • Pescador, Andresa
  • Mayerle, Sérgio Fernando
  • Neiva de Figueiredo, João

Abstract

This paper addresses the seasonal agricultural commodity price stabilization problem both with and without price bands using a spatial and temporal supernetwork framework. The problem is formulated as an extension of the classic spatial price equilibrium problem and solved with the gradient projection algorithm. Results from the model support the use of interseasonal storage mechanisms and confirm that the use of price bands is less effective as it lowers total society surplus while providing inaccurate signaling and therefore dampening market perceptions of product scarcity or excess. An illustrative numerical example provides a comparison between policy alternatives.

Suggested Citation

  • Possamai, Janaína Poffo & Pescador, Andresa & Mayerle, Sérgio Fernando & Neiva de Figueiredo, João, 2015. "Optimal commodity price stabilization as a multi-period spatial equilibrium problem: A supernetwork approach with public buffer stocks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 289-310.
    • Handle: RePEc:eee:transe:v:77:y:2015:i:c:p:289-310
    DOI: 10.1016/j.tre.2015.03.004
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