An interregional equilibrium analysis of the imperfectly competitive onion markets [in Japan]: Implications for the increasing vegetable imports
1996
Matsuda, T. (Hokkaido Univ., Sapporo (Japan). Faculty of Agriculture) | Kurokawa, I.
This paper approaches the interregional equilibrium prices and flows of onions in terms of competitiveness of markets. The spatial price equilibrium model is extended to apply to markets of varying degree of competition, including perfectly competitive and monopolistic ones as the two extremes. The model is formulated as a linear complementarity problem and solved by Lemke's method. The estimators of conjectural variation are incorporated into the model to achieve optimum solutions that prove to be exactly equal to the actual values, which adds credibility to the model simulations. The empirical results suggest that the Japanese onion markets are fairly, not to say perfectly, competitive, and that the higher degree of competition between the domestic production centers makes the market price level lower, decreasing imports, which implies that keeping a high degree of domestic competition is essential to the maintenance of domestic vegetable production in the face of the increasing imports
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