Impacts of agricultural price support policies on price variability and welfare: evidence from China’s soybean market

Wenting Wang and Longbao Wei ()

No 288334, 2019 Annual Meeting, July 21-23, Atlanta, Georgia from Agricultural and Applied Economics Association

Abstract: As the world’s largest importer of agricultural commodities, China’s agricultural policies have significant implications for the world agricultural market. For the first time, we develop an aggregate structural econometric model of China’s soybean market with linkage to the rest of the world to analyze the worldwide impacts of China’s soybean price support policies from 2008 to 2016. We investigate the impacts of China’s policies on the variability of their domestic and world prices, and adopt a Monte Carlo simulation to evaluate the distributional and aggregate welfare effects. Results indicate that (a) China’s soybean price support policies play an effective role in stabilizing their domestic price, while its increasing imports absorb world production surplus and reduce world price swings; (b) China’s producers gain at the expense of consumers and budgetary costs, and the net welfare change in their domestic market is negative; (c) Soybean exporting countries experience considerable welfare gains, and the world net welfare change is positive. Our findings provide new insights for future trade negotiations and agricultural market reforms in developing countries.

Keywords: Agricultural and Food Policy; International Relations/Trade (search for similar items in EconPapers)
Pages: 44
Date: 2019-07
New Economics Papers: this item is included in nep-bec, nep-cna, nep-int and nep-tra
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Citations: View citations in EconPapers (1)

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Working Paper: Impacts of Agricultural Price Support Policies on Price Variability and Welfare: Evidence from China's Soybean Market (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea19:288334

DOI: 10.22004/ag.econ.288334

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