Endogenous price policies and their impact on the level and variability of international wheat prices
1982
Sarris, A.H. | Freebairn, J.
Extract: In this paper we take the attitude that domestic price policies are the result of explicit domestic welfare considerations. We pose the problem of setting domestic price policy as an optimization problem where producer, consumer, government treasury gains, and preferences for producer and consumer price stability are explicitly traded off in arriving at a specific set of yearly prices for consumers and producers. These prices are derived as a function of the international price that the country faces. Given these "optimal" policies, the international price, in turn, is determined by the interaction of the resulting excess demands of all trading countries.
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