Optimal Pricing of Primary Commodities in Developing Countries: A Model from Sub-Saharan Africa

M.K. Ehui and Simeon K. Ehui

No 198054, 1997 Occasional Paper Series No. 7 from International Association of Agricultural Economists

Abstract: In most developing countries, especially in sub-Saharan Africa, prices received by fanners are not optimal in the sense that they do not optimize government revenues. In this paper a dynamic model for optimal pricing of primary commodities is developed. The model and results demonstrate that optimal prices depend on marginal cost of the commodity stock, the exporting country's supply elasticity, the importing country's demand elasticity, the social rate of time discount. Therefore when the model is cast in a static framework, or the foreign elasticity of demand is not accounted for, the result could be biased.

Keywords: Demand and Price Analysis; International Development (search for similar items in EconPapers)
Pages: 9
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaaeo7:198054

DOI: 10.22004/ag.econ.198054

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