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Strategic Behavior and Trade in Agricultural Commodities - Competition in World Peanut Markets

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  • Fletcher, Stanley M.
  • Nadolnyak, Denis A.

Abstract

In this paper, we make an attempt to rationalize the strategic behavior of major peanut exporting and importing countries in the framework of imperfectly competitive markets with the focus on the global and inter-American peanut trade. This study is motivated by the fact that liberalizing imperfectly competitive and often distorted markets can have unorthodox effects, in particular increase the incentives to overuse certain trade policies. The results suggest that the South American peanut producers stand to benefit from the reductions in the U.S. peanut production supports but, paradoxically, preservation of a tariff may still be mutually welfare enhancing. In the broader context of global peanut trade, multi-lateral tariff reduction increases the low-cost exporters' incentives to subsidize export production, which benefits the consumers but hurts the higher-cost producers.

Suggested Citation

  • Fletcher, Stanley M. & Nadolnyak, Denis A., 2006. "Strategic Behavior and Trade in Agricultural Commodities - Competition in World Peanut Markets," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25362, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae06:25362
    DOI: 10.22004/ag.econ.25362
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    References listed on IDEAS

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    1. Scott Rozelle & Johan F.M. Swinnen, 2004. "Success and Failure of Reform: Insights from the Transition of Agriculture," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 404-456, June.
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