Value of the Initial Payment of the Canadian Wheat Board as a Signaling Device
- Date de publication : 2010-01-01
Référence
Tamini, L., J-P. Gervais and B. Larue, The Value of the Initial Payment of the Canadian Wheat Board as a Signaling Device. American Journal of Agricultural Economics 92(2010): 42-55
Sujet
State Trading Enterprises (STEs) in agri-food markets are governmental enterprises which have been granted exclusive or special rights or privileges in the exercise of which they influence, through their purchases or sales, the direction of imports or exp
Résumé
This paper analyzes the role of the initial payment used by the Canadian Wheat Board (CWB) in the determination of export prices and sales under the assumption that the CWB has better information about realized yields in Canada than its US competitor. In the separating equilibrium of the game, the initial payment of the CWB is larger than the initial payment under complete information. There exists an incentive under incomplete information to send a signal that realized yields are greater than expected to induce a reduction in the sales of foreign competitors. We illustrate the strategic value of the initial payment for Canadian wheat producers using a numerical simulation.
