Food subsidies and market interdependence: the case of the Moroccan soft wheat subsidy
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Among the several propositions advanced to explain the rising cost of subsidizing soft
wheat production and consumption in Morocco are the indirect effects emanating from
related markets, namely the hard wheat and barley markets. A three-sector supply-demand
model, described in this paper, was used to estimate the direct and indirect (induced) effects
on government cost of changes in the soft wheat subsidy. The results show that virtually all
the indirect effects come from the soft wheat market itself. The indirect effects emanating
from the related markets are negligible.