Market power and subsidies in the Indonesian palm oil industry
No hay miniatura disponible
Fecha
Autores
Título de la revista
ISSN de la revista
Título del volumen
Editor
Resumen
Descripción
Cooking oil is known as an essential commodity in Indonesia. Having such an important
role, the Indonesian government often interfered the cooking oil market to assure its price
remain low. To do so, the government uses a subsidy policy as one of its instruments. A
dynamic duopoly model is applied to evaluate the impact of subsidies given the structure
of the industry. Estimation results suggest an evidence of both an increase in the
consumer surplus but a decrease in aggregate welfare due to market power. A possible
reason is proposed, but, in order to obtain a clear explanation, further research is required.