Source: UNIV OF MASSACHUSETTS submitted to NRP
COMPETITIVENESS AND VALUE-ADDED IN THE U.S. GRAIN AND OILSEED INDUSTRY
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
COMPLETE
Funding Source
HATCH
Reporting Frequency
Annual
Accession No.
0195243
Grant No.
(N/A)
Cumulative Award Amt.
(N/A)
Proposal No.
(N/A)
Multistate No.
NC-224
Project Start Date
Oct 1, 2002
Project End Date
Sep 30, 2003
Grant Year
(N/A)
Program Code
[(N/A)]- (N/A)
Recipient Organization
UNIV OF MASSACHUSETTS
(N/A)
AMHERST,MA 01003
Performing Department
RESOURCE ECONOMICS
Non Technical Summary
My research examines various aspects of the impact of product differentiation in the wheat industry on international trade, market power, and on the validity of empirical tests of market power. It also examines the impact of state-trading enterprises and marketing boards on world wheat trade.
Animal Health Component
(N/A)
Research Effort Categories
Basic
100%
Applied
(N/A)
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
60315493010100%
Knowledge Area
603 - Market Economics;

Subject Of Investigation
1549 - Wheat, general/other;

Field Of Science
3010 - Economics;
Goals / Objectives
Determine the effects of international trade arrangements and global market power on the competitiveness of the US grain and oilseed production, processing and distribution sectors.
Project Methods
My current research examines three aspects of the impact of product differentiation and market power on world wheat trade. The first aspect examines the ability of the Canadian Wheat Board (CWB) to price discriminate in bread wheat exports. This study contributes to the literature on wheat trade by modeling jointly the presence of imperfect competition, product differentiation, and a state-trading enterprise (STE) competing against private firms. A conceptual model of quality differentiation for consumer goods developed by Mussa and Rosen (1978) is modified to accommodate the realities of bread wheat import demand. The model isolates the bases of price discrimination and demonstrates that the CWB's ability to exploit cost differences in pricing depends on the extent of the differentiation between Canadian and U.S. wheat. This model is implemented empirically using monthly confidential price data provided by the CWB for exports to Japan, the United Kingdom, and two markets aggregating remaining exports through Canada's west and east coasts, for 1982-1994.

Progress 10/01/02 to 09/30/03

Outputs
A working paper was published and was presented at one invited seminar. On-going work involves examining the impact of the reform of state-trading enterprise when considering quality as an endogenous variable. Work has begun on the examination of the validity of the pricing-to-market test of price discrimination when using unit values aggregating differentiated products. The first paper examines this issue conceptually and was presented at one conference and one invited seminar. The second paper examines the issue empirically using Canadian export wheat data and was presented at one conference.

Impacts
Exporting and importing state trading enterprises are a topic of negotiation during the current round of the WTO negotiations, more specifically the United States hopes to eliminate those enterprises. These projects examine the impact of those enterprises on the domestic and international performance of the wheat markets, in particular their value to domestic producers, their impact on trade patterns and on the quality of wheat imported and therefore grown domestically. The results of this project are used to inform policy makers on the likely domestic impact of privatizing foreign wheat imports and exports.

Publications

  • No publications reported this period