Pricing Policy Under Double Market Power: Madagascar and the International Vanilla Market

Jaime de Melo, Marcelo Olarreaga and Wendy Takacs

Review of Development Economics, 2000, vol. 4, issue 1, 1-20

Abstract: This paper uses a price‐leadership model of the international vanilla market to study the welfare consequences of alternative pricing policies for Madagascar, the leader, that also controls domestic production through a single‐channel marketing system. Econometric estimates of the model are used for simulations of welfare and revenue changes and internal redistribution of income. Results indicate that Madagascar could have gained between 0.9% and 2.6% of GDP per year on average over the period 1981–91 by following optimal pricing policies, and that producers were overtaxed suggesting that political economy considerations played a role in the pricing decisions.

Date: 2000
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https://doi.org/10.1111/1467-9361.00075

Related works:
Working Paper: Pricing policy under Double Market Power: Madagascar and the International Vanilla Market (1996)
Working Paper: Pricing Policy Under Double Market Power: Madagascar and the International Vanilla Market (1996)
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