European demand for frozen concentrated orange juice

Imports of frozen concentrated orange juice into the European market has continued to increase with both Brazil and the United States being highly competitive suppliers. Efforts to increase market shares within the EEC has led to a number of structural adjustments in these exporting countries. Brazil subsidizes its exports of concentrate through tax incentives. In contrast, the U.S. and primarily Florida has developed a complex pricing system within the market place that facilitates price discrimination between the U.S. domestic and export markets. This system theoretically provides a method for the U.S. to remain competitive in the world market while still maintaining a price premium in the domestic market (Ward, 1976a: 133). U.S. concentrate is exported through an oligopolistic market structure where price adjustments are apparent to all processors. Theoretically, one processor could cut his export price and increase his share in foreign markets. If the foreign demand were elastic and the domestic inelastic, then total returns could be increased to that processor who exports. The remaining processors could simultaneously share in any gains realized in the domestic market due to reduction in domestic supplies without selling any of their product at the reduced export price. This potential for unbalanced gains to all processors has prevented voluntary price discounting within the oligopolistic structure. Yet, the U.S. domestic price is consistently at a premium