Producers' Price Expectations and the Size of the Welfare Gains from Price Stabilisation

This paper uses a simulation model to measure the size of the social welfare gains from price stabilisation within the general setting of a non-linear, multiplicative risk and lagged expectations model of the market. The size of the gains is found to be relatively small when producers plan on the basis of rational expectations, but it can be quite substantial for other types of expectations behaviour, including those commonly assumed in empirical supply analysis. We conclude that, in many cases, improved market information services may more economically provide the substantial part of the social benefits of price stabilisation.


Issue Date:
1983-08
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/12452
Published in:
Review of Marketing and Agricultural Economics, Volume 51, Number 02
Page range:
93-107
Total Pages:
15




 Record created 2017-04-01, last modified 2017-08-23

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