Modeling International Grain Trade with Government Controlled Markets

Abstract

Abstract Government interventions have a pervasive impact on international grain trade, yet models of that trade treat the role of government as an exogenous influence. A model endogenizing government is presented as an alternative to spatial equilibrium trade models. That model is also used to interpret parameters in a net import demand model and to argue that the effect of international prices and production on trade often will be smaller than what is derived from domestic supply and demand equations. Econometric evidence supporting that contention is presented for trade in wheat and feed grains by thirty‐three countries.