Book contents
- Frontmatter
- Contents
- Preface
- Acknowledgments
- 1 Introduction
- Part I The basic model
- Part II Implications of storage for research on time series
- Part III Extensions of the model
- Part IV Public interventions
- 12 Welfare analysis of market stabilization
- 13 Floor-price schemes
- 14 Public storage under price bands and price pegs
- 15 Public policies to supplement private storage
- Part V Epilogue
- References
- Author index
- Subject index
14 - Public storage under price bands and price pegs
Published online by Cambridge University Press: 03 February 2010
- Frontmatter
- Contents
- Preface
- Acknowledgments
- 1 Introduction
- Part I The basic model
- Part II Implications of storage for research on time series
- Part III Extensions of the model
- Part IV Public interventions
- 12 Welfare analysis of market stabilization
- 13 Floor-price schemes
- 14 Public storage under price bands and price pegs
- 15 Public policies to supplement private storage
- Part V Epilogue
- References
- Author index
- Subject index
Summary
Many recent market-stabilizing schemes involving storage, and most of the concrete proposals for such schemes by economists, are some type of priceband scheme. For example, the analytical framework of Ghosh et al. (1987) is centered around price-band schemes, from the econometric exercises to the policy simulations. Following earlier writers like Keynes (1972 [1942]), just a few of the more recent examples of an analytical focus on price bands include Brown (1975), Behrman and Tinakorn–Ramangkura (1978), Chaipravat (1978), Ford (1978), Behrman (1979), Gardner (1979, chap. 5), Hallwood (1979), Sarris et al. (1979), Gardner (1982), Miranda and Helmberger (1988), Ahmed and Bernard (1989), and Glauber et al. (1989). In many actual international commodity agreements, the manager of the public stockpile is charged with keeping price within some band, with rules mandating accumulation of stocks at the bottom of the band and release at the top, often with some managerial discretion within intermediate price ranges (Gardner 1985; Gilbert 1987). For example, the various International Cocoa Agreements have had a ceiling price and a floor price symmetric about an “indicator” price, with the price band comprising both a trigger range, in which the buffer stock's manager can intervene at his discretion, and a nonintervention range. Many U.S. farm programs have had what amounts to a floor price and a much higher release price (Langley et al. 1985).
Price-band schemes have a superficial attractiveness and logic. Seemingly the disruptions of price changes are reduced by efforts to keep prices in a narrow band. Seemingly the symmetry of the band around the long-term mean price favors neither consumers nor producers.
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- Information
- Storage and Commodity Markets , pp. 391 - 409Publisher: Cambridge University PressPrint publication year: 1991