Market interventions, international price stabilization, and welfare implications

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Abstract

The welfare effects of price stabilization are quantified under free trade and under distortionary policies when an exporting country protects domestic producers with price supports, an importing country pursues a price-fixing policy, and a second importing country follows a free trade policy. Results show that distortionary interventions cause greater world price variability. World gains from international price stabilization through a costless buffer stock scheme are higher under distortionary trade than under free trade.

Original languageEnglish
Pages (from-to)281-290
Number of pages10
JournalAmerican Journal of Agricultural Economics
Volume74
Issue number2
DOIs
StatePublished - May 1992

Keywords

  • Distortionary trade
  • Free trade
  • Price stabilization
  • Welfare analysis

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