agricultural economics, international policy, tobacco, trade
The economic impact of international policy interdependence is illustrated using the world tobacco market as an example. The price discovery process is assessed using U.S. and Australian data. It appears that world tobacco prices are set through an oligopolistic rule-of-thumb pricing system with the U.S. being the tacit price leader. As a result, there has been a causal relationship between U.S. and Australian tobacco prices . However, no direct supply response to U.S. prices was observed in Australian markets.
Department of Economics, South Dakota State University
Number of Pages
Blank, Steven, "Policy Interdependence, Causality and Supply Response in World Markets: The Case of U.S. and Australian Tobacco" (1984). Economics Staff Paper Series. 23.