Price competition in the hard spring wheat market : a market specific analysis

Abstract

Price competition between the United States and Canada in the hard spring wheat markets of Japan, South Korea, and Indonesia are examined using annual data over a thirty year period. A four-equation system of supply and demand functions is used to estimate parameters that measure the price relationship of U.S. and Canadian hard spring wheat in each market. The models were estimated with three stage least squares procedures. Besides the parameters measuring price movement of hard spring wheat in the South Korean and Indonesian markets, results are generally not statistically different from zero. Supply and demand equations in the Japanese market have common estimated parameters that are the correct sign and statistically significant. Econometric results of the Japanese market indicate that the United States and Canada are acting as noncolluding oligopolists. Comparing the mixed results of the South Korean and Indonesian markets with those of the Japanese market suggest that the United States and Canada are not competing as strongly in the Japanese market as they are in South Korea and Indonesia.