Short-Run Demand Elasticity Estimates in International Grain Trade

The international market for grains joins economic and political decision making at the national level. Outcomes predicted from the theory of comparative advantage can be potentially swayed by political swayed by political choices as well as technical factors. Empirical estiamtes of import demand elasticities for grains provided in this paper are based on a model that treats domestic agricultural policy as an active ingredient in trading decisions. Results show that domestic pricing, production, and stockholding policies of importing countries can and often do have an impact on demand elasticities at the international level. Taking into consideration the interdependence of domestic policy effects contributes to the development of effective agricultural and foreign policy