@article{Dong:201543,
      recid = {201543},
      author = {Dong, Fengxia and Marsh, Thomas L. and Stiegert, Kyle W.},
      title = {State Trading Enterprises in a Differentiated Product  Environment: The Case of Global Malting Barley Markets},
      address = {2005-01},
      number = {1803-2016-142512},
      series = {FSWP},
      pages = {40},
      year = {2005},
      abstract = {The lack of transparency in the pricing and operational  activities of state trading enterprises (STEs) has
caused  WTO members to express concern that certain countries’ STEs  might circumvent Uruguay Round
commitments on export  subsidies, domestic support, or market access. The purpose  of this study is to
examine the market structure of the  differentiated world malting barley market in which two  STEs (the
Canadian Wheat Board and Australian Barley Board)  maintain jointly a very large share of the export
market.  In particular, this study focuses on the exclusive  procuring and pricing policies used by both STEs
to test if  these intra-country mechanisms can generate leadership and  shift rent from other exporting
countries. A conceptual and  empirical framework is also provided to test if STEs set  their initial payments
at optimal levels. Four key results  are forthcoming from this research. First, we found strong  support that
the global malting barley market operates in a  quantity setting oligopolistic structure. Second, both  STEs
and other exporting countries were in Cournot  competition, and thus held the potential to exercise  rentshifting
behavior using their initial payment  structures. Third, while some distortionary impacts from  the
STE prepayment systems were possible, we did not find  evidence that it was a tool either STE employed.
Empirical  results from the precommitment stage show that both STEs  did not set their initial payments low
enough to maximize  their profits. Fourth, It appears that the strong anecdotal  and statistical evidence of
product differentiation  dampened significantly the desire/ability of malting barley  STEs to pursue a rentshifting
objective.},
      url = {http://ageconsearch.umn.edu/record/201543},
      doi = {https://doi.org/10.22004/ag.econ.201543},
}