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Impacts of trade liberalization and market reforms on the paddy/rice sector in Sri Lanka

By: Weerahewa, Jeevika.
Series: 70 MTID discussion Paper no. Publisher: Washington International Food Policy Research Institute 2004Description: XIV, 119p.Subject(s): Sri Lanka Trade Rice Paddy Trade liberalization AOA WTO CDSummary: The overall objective of this research project is to assess the impacts of different types of government policies (pertaining to the domestic and external sectors) on the status of food security in the country, with particular emphasis on the paddy/rice sector. This study examines the impacts of trade liberalization in imperfectly competitive markets. The objective is to assess the impacts of rice trade liberalization in the presence and absence of market power. For this purpose, a partial equilibrium model is developed for the paddy market in Sri Lanka, under oligopsony, since the bargaining power of paddy suppliers is smaller than that of paddy buyers. Using this model, impacts of trade liberalization were simulated. Results reveal that losses to paddy producers due to trade liberalization can be minimized if oligoposony power can be eliminated simultaneously. Therefore, strategies to eliminate oligopsony power along with trade liberalization are recommended to achieve efficiency gains. The study concludes by drawing policy implications, based on the analysis and findings of the study. [From Author’s summary]
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The overall objective of this research project is to assess the impacts of different types of government policies (pertaining to the domestic and external sectors) on the status of food security in the country, with particular emphasis on the paddy/rice sector.
This study examines the impacts of trade liberalization in imperfectly competitive markets. The objective is to assess the impacts of rice trade liberalization in the presence and absence of market power. For this purpose, a partial equilibrium model is developed for the paddy market in Sri Lanka, under oligopsony, since the bargaining power of paddy suppliers is smaller than that of paddy buyers. Using this model, impacts of trade liberalization were simulated. Results reveal that losses to paddy producers due to trade liberalization can be minimized if oligoposony power can be eliminated simultaneously. Therefore, strategies to eliminate oligopsony power along with trade liberalization are recommended to achieve efficiency gains. The study concludes by drawing policy implications, based on the analysis and findings of the study. [From Author’s summary]

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