Showing papers on "Commodity published in 1973"

The Effect of Market Organization on Competitive Equilibrium: the Multi-unit Case

Abstract: A few years ago V. L. Smith reported a series of experiments concerning the effects of market organization on competitive equilibrium [4]. Three market organizations were explored in those experiments: (1) sellers making price offers; buyers free to accept offers, but not permitted to make price bids, (2) buyers making price offers; sellers free to accept offers, but not permitted to make price bids, and (3) both sellers and buyers making price bids and free to accept offers. These market organizations were investigated under the condition that each buyer and each seller could trade at most one unit in any market period. This paper reports experiments designed to extend Smith's work to the case in which traders may trade multiple units of the commodity in any market period. Because market organization (3) would present some procedural difficulties in the multiple unit case, only organizations (1) and (2) were investigated in my experiments. These two organizations capture the essential structure of some familiar markets. For example, as Smith notes [4, p. 182], the exchange process in most United States retail markets has traditionally been sellers offering merchandise at stated prices and buyers responding by purchasing the quantities desired, with no price bargaining. Reversing the price leadership roleallowing buyers to state price offers and sellers to respond with quantities-reflects the structure of markets such as the crude oil market and some food markets (e.g., food processors purchasing from growers). Also it appears that the behaviour of markets under organizations (1) and (2) places rough bounds on the behaviour of markets under organization (3),3 so I probably have not lost too much information by considering only organizations (1) and (2). One additional aspect of market organization differentiates my experiments from Smith's. In his experiments the bidding process continued throughout the market period, enabling the price bidders to alter their offers during a trading period. In my experiments price offers were posted at the beginning of each period and could not be changed for the duration of that period. This condition is a bit artificial since price bidders in real markets can alter their price bids at any time, not merely at the beginning of some specific trading period. Obviously, though, there is some short period between price changes, and it is this characteristic that I hoped to capture.

Competitive economic systems: Stability, decomposition, and aggregation

Abstract: The purpose of this work is to formulate, analyze, and resolve stability of competitive equilibrium under structural perturbations in the Hicks-Metzler algebraic setting. Nonstationary models are introduced for multiple markets of commodities or services, to consider a reduction in the number of commodities, nonlinear saturation phenomena, changing of a commodity from a substitute to a complement to another commodity, time-varying shifts in excess demand, etc. By using the modern mathematical methods of the comparison principle and the vector Lyapunov function, a decomposition-aggregation approach is proposed to treat large market systems. A commodity can be split up into a number of subcommodities, or several commodities can be combined into one composite commodity. Then, a low-order linear aggregate market model can be formed which represents the price adjustment mechanism for the composite commodities. Stability of the aggregate model implies stability of the original nonlinear and nonstationary market, and stability is connective. That is, stability of the aggregate model implies stability of each subset of markets for the composite commodities. This is remarkable in that it shows a wide tolerance of stable market models to nonlinear nonstationary phenomena and, therefore, inherent robustness of competitive equilibrium in economic systems.

Three International Commodity Agreements: The Experience of East Africa

Abstract: Introduction Pressures for international commodity agreements that seek, by means of export restriction schemes, to raise the aggregate export earnings of producing countries are increasing. Such pressures reflect (a) the willingness of consumer countries to make income transfers to poorer countries through this politically acceptable medium, (b) the wish of some producing countries to protect their export crop industries from unwanted competition from new producers, and (c) the desire of international civil servants to promote development from developed country bases. The purpose of the present paper is to strike a discordant note in this otherwise agreeable congruence of interests by focusing attention on the distribution of gains from international commodity agreements among producing countries, with particular attention to the relative shares of the gains that the three East African countries have obtained or are likely to obtain from the agreements that affect three of their principal export crops: coffee, sisal, and tea. The three agreements in question are the International Coffee Agreement (ICA), now in its second 5-year term, the informal sisal agreement (ISA) under the auspices of the Consultative Sub-Committee of the Food and Agriculture Organization of the United Nations (FAO) Study Group on Hard Fibres, which came into effect in January 1968, and the informal tea agreement (ITA) under the FAO Consultative Committee on Tea, which has been in operation just over a year. While the language used to phrase the stated objectives of each of these agreements differs, the implied objectives and means of achieving them are the same, namely, to increase export earnings by getting producing countries to act together quasimonopolistically in restricting supply against an inelastic demand. Thus, the 1968 ICA under Article I has the stated objectives of eliminating fluctuations in coffee prices and increasing the purchasing power of coffee

The Use of Extraneous Information in the Development of a Policy Simulation Model

Abstract: A number of highly aggregated policy simulation models have been developed for the US agricultural sector While these models are useful in providing broad-stroke sketches of the effects of alternative farm policies, they have been criticized for their lack of commodity detail Individuals, organizations and congressmen from a cattle producing state, as an example, are more interested in the impact of a changed agricultural policy on cattle prices and incomes than its effect on the income of all farmers The reason most often given for not disaggregating by commodity groups is the researcher's reluctance to quantify opportunities for substitution among commodities in production and consumption However, there may be more agreement on the relative magnitudes of supply and demand elasticities for individual commodities than the price elasticities of supply and demand for all farm output Hence, a disaggregated model may distort reality much less than a highly aggregated model and at the same time provide detail on indirect effects of proposed policies that is so often sought by policy makers

Government and Agricultural Adjustment

Abstract: WHEN the new round of GATT negotiations start next month, negotiations on tariff and nontariff barriers on farm products will have a central and critical role. That role may be so critical that if little or no progress is made toward liberalizing trade in farm products, the negotiations will fail. Indeed the tide of isolationism and protectionism may well become so strong that recent trends toward increasing interferences with trade and other international economic relations, evident in the United States for the past five years, will win the day. It cannot be stressed too much that the strongest political support for trade liberalization in the United States comes from certain farm commodity interests. If these interests are thwarted once again, as they feel they were in the two previous GATT negotiations, they also are likely to turn inward. On many of these issues Canada and the United States find themselves in a similar situation. Both are industrial nations with less than 5 percent of their gross domestic product originating on farms. But because of the organization of their agricultures, based on highly effective divisions of labor and functions, served by efficient input industries and effective marketing services, the percentage of gross domestic product produced on farms greatly underestimates the trade significance of the production of farm commodities in each of the economies. Further, because of enormous amounts of land available, at least on a per capita basis, and the efficiency of their farms and the industries that are associated with farm commodities, in each of the two high income industrial countries farm products have a distinct comparative adva ta e. Thus both countries stand to lose if there is trade liberalization for nonfarm products and services and none for farm products since they would not have the opportunity to exploit the major comparative advantage that they possess in agriculture. So far as the GATT negotiations are concerned, the major international markets for the farm products of North America are in Western Europe and Japan. Unless Western Europe and Japan significantly modify their tariff and nontariff barriers affecting farm products, many of the possible gains from agriculture's comparative advantage in North America will not be realized.

Trade Between East and West Pakistan at World Prices, 1960/61-1969/70

Abstract: The costs and prices of the commodities traded between East and West Pakistan are an aspect of interwing trade. It has been argued that dometically produced goods often involved greater costs of production and higher "' prices and therefore imports from one region to the other have been higher priced than similar goods from overseas. However the extent of the price differential between the domestic and world market varies from commodity • to commodity because of the unequal degree of protection or subsidy given by the Government. In other words the..implicit exchange rate is not the same for all commodities and it differs consiaerably between different goods.

CIPEC — The copper exporting countries

Abstract: The situation in the world copper markets has been of woridwide interest, not only due to nationalization efforts in several producing countries but also because of the growing desire of less developed countries (LDCs) to establish international commodity agreements similar to the CIPEC model.

On Market Development for Food Products

Abstract: With the industrialization that has been occurring in the agricultural sector, various agricultural commodity interests are increasingly recognizing the need for an organization for marketing Once formed, commodity organizations commonly wish to develop markets for their product but likely lack the expertise to evaluate alternatives open to their organization for market development In addition, no comprehensive statement of the market development concept has appeared in the literature This situation lends impetus to the need for a definition and description of market development along with the alternatives which may exist for various marketing institutions

Rising commodity prices

Abstract: In the wake of faster economic growth and thus higher demand for commodities in the Western world, the upward trend of the prices for industrial raw materials continued during 1972, and indeed gathered speed, on world markets. The following contribution is an analysis of the development in the past year and attempts a preview for 1973.