Thailand’s Market Power in Its Rice Export Markets
2014
Mahanaseth, Itthipong | Tauer, Loren W.
We measure the degree of market power Thailand has in its major rice export markets. Elasticities of residual demands for Thai rice for its important export destinations of China, Indonesia, USA, and South Africa were estimated and used as indicators of the degree of competition or market power in each respective market. Thai rice exports were classified into four categories consisting of aggregated white rice, Hommali rice, glutinous rice, and parboiled rice. For aggregated rice exports, the results reveal that Thailand does not have market power to influence export prices in its four major export markets. Instead, Thailand faces fierce competition from the rice-exporting countries of Vietnam and India, whose rice appears to be very close substitutes to Thai rice. Likewise, in the case of the disaggregated Hommali rice export market, Thailand does not possess market power. However, results indicate that Thailand has some market power in the glutinous rice export markets to China and Indonesia. Lastly, Thailand appears to have significant market power over parboiled rice export to South Africa. These results are useful in ongoing discussions of Thailand rice policies.
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