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Journal of International Food & Agribusiness Marketing Volume 24, 2012 - Issue 3

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Original Articles

Market Power and World Price: The Role of Asian Rice Exporters

C. S. C. Sekhar University of Delhi Enclave, Delhi, IndiaCorrespondence[email protected]
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Pages 250-272 | Published online: 11 Jul 2012

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https://doi.org/10.1080/08974438.2012.691818

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Abstract

An attempt has been made in this study to assess the market power of major Asian exporters in world rice market using standard oligopoly models. Quantity has been used as the strategic variable based on previous literature. Structural and reduced form approaches have been used. Results indicate that the major Asian rice exporters like Thailand, China, and India face a downward sloping demand curve whereas the United States does not appear to possess market power. However, the results are inconclusive about the precise market structure. The results, in the backdrop of the history of world rice markets, indicate a need for Asian exporters to rely more on trade than on domestic stocks in order to reduce the thinness of world rice market.

KEYWORDS:

empirical industrial organization
market power
new trade theories
strategic trade policy
world rice market

Notes

*Statistically significant at 10% significance level.

**Statistically significant at 5% significance level.

***Statistically significant at 1% significance level.

*Statistically significant at 10% significance level.

**Statistically significant at 5% significance level.

***Statistically significant at 1% significance level.

Note. MEP = minimum export price.

These studies can be broadly categorized as follows: (a) pricing-to-market models (Love & Murniningtyas, Citation1992; Park & Pick, Citation1996; Pick & Carter, Citation1994; Pompelli & Pick, Citation1990), (b) competitive models of rice market (Agbenyegah, Citation2002; Chaipravat, Citation1978; Cramer et al.,Citation1993; Moriak, Strickland, & Grant, Citation1975; Sarris & Freebairn, Citation1984; Sekhar, Citation2003a), and (c) noncompetitive models (Karp & Perloff, Citation1989; Mitchell & Duncan, Citation1987; Schmitz, McCalla, Mitchell, & Carter, Citation1981; Yavapolkul et al., Citation2004).

B-G refers to the Breusch-Godfrey Lagrange Multiplier (LM) test for serial correlation. It is not possible to estimate Durbin's h statistic in certain cases (when n.Var(b₁) > = 1). See Breusch (Citation1978) and Godfrey (Citation1978).

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Additional information

Notes on contributors

C. S. C. Sekhar

C. S .C. Sekhar is associate professor at the Institute of Economic Growth, Delhi University Enclave, Delhi, India.

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