A Duopoly Model of World Wheat Pricing

Alex F. McCalla

American Journal of Agricultural Economics, 1966, vol. 48, issue 3_Part_I, 711-727

Abstract: The interaction of domestic wheat policies in the international wheat market is analyzed through the constructs of imperfect competition theory. A cooperative duopoly model is presented as a conceptual framework for analyzing historic price behavior and for studying the implications of potential changes in domestic and international conditions. Canada and the United States are the duopolists, with Canada the price leader and the United States the usually silent partner. Australia, Argentina, France, and the smaller exporters constitute a fringe of price followers. The demand side is competitive in the sense that no major importer exerts market power except through the price limits of the IWA. The model suggests that relative price stability in the world wheat market from 1956 to 1965 has resulted mainly from the stabilizing actions of Canada and the United States.

Date: 1966
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