Implications of recent Australian wheat industry developments for overseas and domestic prices

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.

A theory of rational spatial agglomerations

We model the behavior of rational forward-looking agents in a spatial economy. The economic geography structure is built on Fujita et al. (1999)'s racetrack economy. Workers choose optimally what to consume at each period, as well as which spatial itinerary to follow in the geographical space. The spatial extent of the resulting agglomerations increases with the taste for variety and the expenditure share on manufactured goods, and decreases with transport costs. Because forward-looking agents anticipate the future formation of agglomerations, they are more responsive to spatial utility differentials than myopic agents. As a consequence, the emerging agglomerations are larger under perfect foresight spatial adjustments than under myopic ones.

Cartels and rent sharing at the farmer–trader interface: evidence from Ghana’s tomato sector

Itinerant traders provide an important route for West Africa’s farmers’ to get their perishable produce rapidly to the distant urban markets. But these farmers often accuse the traders of offering “unfairly” low prices while preventing direct access to these markets. Using Ghana’s tomato sector as a case study, we provide the first detailed exploration of the interface between Ghana’s farmers and traders, combining a theoretical model with novel empirical data on daily sales prices and tomato quality. We find that although the prices traders pay farmers are lower than prices in the urban markets, taking into account transport costs, these prices are higher than farmers receive from the local rural market. Our article suggests that policymakers would do better to focus on opening up access to the urban markets rather than on strengthening farmers’ bargaining power with the traders, which restricts market volumes further and harms farmers unable to sell to traders.