Third Country Effects of Price Discrimination: The Case of the Canadian Wheat Board
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This study considers whether the major concern with the behaviour of exporting state trading enterprises (STEs) should be the practice of price discrimination. Using a differentiated products world wheat model, the impacts of Canadian price discrimination on the welfare of competing exporters are considered. The results show that competing exporters could be better or worse off as result of price discrimination, but the impacts were small. Over a range of possible elasticities US producers were generally better off if North American arbitrage is assumed. Other wheat exporting regions could see their producer’s welfare change between 2 and -0.5%. Given these small impacts, the study suggests that explicit disciplines on discriminatory pricing exporting STEs may not be appropriate.