State Trading Enterprises and Price Stabilization

Jean-Marc Bourgeon, Sebastien Jean and Anais Maillet

No 211367, 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists

Abstract: The widespread use of State Trading Enterprises (STEs) in international trade of commodities is often justified by price-stabilizing objectives. In investigating the theoretical underpinnings of such interventions, we point out that STEs combine the possibility to stabilise domestic prices with the opportunity to redistribute custom duty proceeds to producers. Using a two-country general equilibrium model with import STEs, we show that global welfare is maximized when a non-zero, non-prohibitive tariff is applied. Whatever the restriction on the border, letting farmers be the only recipients of tariff revenues is optimal, because it allows income insurance to be provided.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 30
Date: 2015
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae15:211367

DOI: 10.22004/ag.econ.211367

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