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Abstract
This study is motivated by the proposition that the objectives of the AWB Ltd have
changed since semi-privatisation of the Australian Wheat Board under the Wheat
Marketing Act, 1989. Conceptualising this change of objectives as a shift from revenue
maximization to profit maximization, this study examines the impact of such a change on
the pricing policies of a multi-market price-setting firm. More specifically, this paper
investigates, using two hypothetical objective functions, a risk averse AWB’s price-setting
behaviour in an “overseas” and a “domestic” market in response to recent wheat
industry developments. In the analysis these developments manifest themselves as
differing price elasticities, differing transport costs and uncertain demand functions, and
their implications particularly for the prices paid by domestic consumers are explored.