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Abstract

A model designed to indicate the effects of alternative Government rice programs gave an inelastic domestic demand (-.14) and an elastic export demand (-1.57) for U.S. rice in 1970. With no price change, about 98 percent of the production from any increase in rice allotments would have to be exported. Changing the support price influences domestic consumption in the opposite direction of the price change, but not proportional to the price change. Selection of the best of three types of programs examined (two-price plan, direct payment plan, and current program) must depend on determining who, consumer or taxpayer, should bear the costs of the program. With no Government rice programs, an equilibrium price of $3.40 and production of 138.7 million hundredweight would result. The rice industry with monopoly control of distribution could market the same output at a much higher price ($6.04) by using price discrimination between the domestic and export markets.

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