Domestic price stabilisation, trade restrictions and buffer stock policy: A theoretical policy analysis with reference to EEC agriculture

A. J. Rayner and G. V. Reed

European Review of Agricultural Economics, 1978, vol. 5, issue 2, 101-118

Abstract: This paper presents a simplified theoretical model of an EEC market in an internationally traded and storable farm product subject to the influence of random shifts in both domestic and world supplies. Internal price stability is accepted as a policy goal and the analysis investigates the use of differing mixtures of trade interference and buffer stock operations to achieve this goal. In all cases, an upward sloping import curve and a degree of domestic price protection in ‘normal’ years are assumed to be representative of reality. It is argued that on the basis of both internal and external criteria there is a case for some degree of buffering of domestic supply variations provided storage costs are not excessive. In addition, it is shown that limited buffering of world supply variations is worthy of consideration.

Date: 1978
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