1 / 7

Price policy analysis in an open economy setting

Price policy analysis in an open economy setting. Economics of Food Markets Lecture 14 Alan Matthews. Small open economy. In a small open economy, we can represent the rest of the world by means of a horizontal supply curve (for an importer) or horizontal demand curve (for an exporter).

meriel
Download Presentation

Price policy analysis in an open economy setting

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Price policy analysis in an open economy setting Economics of Food Markets Lecture 14 Alan Matthews

  2. Small open economy • In a small open economy, we can represent the rest of the world by means of a horizontal supply curve (for an importer) or horizontal demand curve (for an exporter). • The world market price represents the opportunity cost to a country of the commodities it produces or consumes

  3. Example: Import tariff

  4. Example: Import quota Area c is now quota rent which accrues to exporters

  5. Example: Export subsidy

  6. Example: Deficiency payment

  7. Summary • Governments have a variety of ways of supporting their farmers • Border measures (either tariffs/quotas or exports subsidies depending on trade status) • Direct payments • Consumer subsidies • Input subsidies • All interventions designed to transfer income to farmers have allocation effects and thus impose a social cost on society • Ideally, given the transfer objective, the government should choose the measure with the lowest unit transfer cost/greatest transfer efficiency

More Related