Author
Listed:
- McCorriston, Steve
- Sexton, Richard J.
- Sheldon, Ian M.
Abstract
In the analysis of commodity markets, comparatively little attention is paid to the fact that commodity exports from developing countries are intermediates that form inputs into the food processing and retail sectors in developed countries. This has led many commodity exporting countries to argue that access to developed country markets and the prices they correspondingly receive is determined by market structure characteristics of the downstream food sector. Given the vertical nature of these markets, they are most appropriately characterised by successive oligopoly. Moreover, the problem of successive oligopoly may also coexist with oligopsony power that is an additional determinant of commodity prices in exporting countries. In this paper, we set out a simple framework that explicitly accounts for the vertical structure of commodity markets where oligopoly and/or oligopsony power may characterise any or all stages of the downstream food chain. By characterising commodity markets in a way that explicitly accounts for vertical market structure, we can in turn explore trade policy issues facing developing country commodity exporters. Specifically, we focus on the reduction of tariffs in developed countries, the key point being that the impact of tariff reform on developing country commodity exporters is determined by the market structure characteristics of the downstream sectors. We show that the impact of trade reform is likely to be different compared to the competitive benchmark that is commonly assumed and will likely vary with specific characteristics of the vertical market structure. We highlight the effects of vertical market structure and trade reform with simulated examples. In addition, in a set-up that accounts explicitly for market structure, we show that this may also have an impact on the tariff escalation issue. We also comment on avenues for future research that arise by characterising commodity markets using the framework outlined.
Suggested Citation
McCorriston, Steve & Sexton, Richard J. & Sheldon, Ian M., 2004.
"Vertical Market Structure, Commodity Exports and Trade Reform,"
Conference papers
331211, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
Handle:
RePEc:ags:pugtwp:331211
Download full text from publisher
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pugtwp:331211. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/gtpurus.html .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.