Market Power in Commodity Crisis
نویسنده
چکیده
This paper shows that changes in market power explain one of the major commodity crises in recent history. I estimate coffee bean demand and then use the estimates jointly with a model of supply side to recover the effectiveness of the export quota agreement. Of the 73.7% price decline between 1988 and 2001, 53.7% points are attributed to the 1989 cartel breakdown. Growing exports from Vietnam and other supply/demand shocks explain further 10.5% points and 9.0% points. The results suggest the potential for cross-fertilization between competition, international trade, and foreign aid policies.
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