Market Power in International Commodity Trade: The Case of Coffee

Journal of Industrial Economics, Forthcoming

36 Pages Posted: 5 Jan 2010 Last revised: 4 May 2015

See all articles by Mitsuru Igami

Mitsuru Igami

Yale University - Department of Economics ; Yale University - Cowles Foundation

Multiple version iconThere are 2 versions of this paper

Date Written: February 26, 2014

Abstract

This paper studies the impact of market power on international commodity prices. I use a standard oligopoly model and exploit historical variations in the structure of the international coffee bean market to assess the impact of a cartel treaty on coffee prices and its global welfare consequences. The results suggest the International Coffee Agreement (ICA, 1965-89) raised its price by 75% above the Cournot-competitive level, annually transferring approximately $12 billion from consumers to exporting countries, and its lapse in 1989 explains four-fifths of the subsequent price decline, that is, the "coffee crisis."

Keywords: Collusion, Commodity, International Trade, Market Power, Oligopoly

JEL Classification: D43, F12, F13, F14, F35, F51, F53, G13, L11, L13, L41, O13, O16, O19, Q17

Suggested Citation

Igami, Mitsuru, Market Power in International Commodity Trade: The Case of Coffee (February 26, 2014). Journal of Industrial Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1531401 or http://dx.doi.org/10.2139/ssrn.1531401

Mitsuru Igami (Contact Author)

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
430
Abstract Views
1,745
rank
66,707
PlumX Metrics