Producer-consumer trade-offs in export cartels
1979
Carter, Colin A. | Schmitz, Andrew | Gallini, Nancy
Extract: The purpose of this paper is to consider the case of wheat exports where the commodity in question has a relatively large domestic demand component and to demonstrate that a sharp distinction has to be made between a producer export cartel and a government export cartel. The model is applied to the world wheat economy; and, interestingly, the empirical results suggest that there is a strong possibility that producers would, in fact, lose from a government wheat cartel if there are decreasing returns in production unless compensated by a tax on consumers. This result raises several important policy issues.
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