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https://hdl.handle.net/2142/69853
Description
Title
Export Strategies for Ivory Coast Cocoa
Author(s)
Gbetibouo, Mathurin
Issue Date
1983
Department of Study
Agricultural Economics
Discipline
Agricultural Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Agricultural
Abstract
Cocoa is a vital export commodity to the Ivory Coast. Cocoa revenues have recently started a declining trend, following a similar pattern in prices. Because of these circumstances, this study proposes to the Ivory Coast a set of export strategies in non-competitive and non-cooperative market settings, using policy actions such as taxation, hedging, coalition formation, reservation pricing and scheduled marketings. One can typify the cocoa market as an interfacing of oligopolistic exporters and oligopsonistic importers, thus the market equations needed to find spatial equilibrium solutions are not only the export supply and import demand equations, but also marginal export revenue and marginal import cost functions to account for non-competitive behavior. In this latter case, retaliations might lead to indeterminate solutions, and game theoretical reasoning is used to suggest stable market outcomes.
It was found that (i) beyond a 150 percent level of implicit taxation, the revenues to the Ivory Coast from cocoa exports will decline at the advantage of her competitors. (ii) a four-month hedge is not clearly superior to not hedging. However, both of these selling techniques were superior to a six-month hedge in terms of means and variances of export revenues generated. (iii) even though selling as much as possible early in the crop season is the dominant strategy for all the major exporters, this policy yields a sub-optimal solution. (iv) the Ivory Coast will benefit more by joining a coalition with Ghana, Cameroon, and Nigeria than by being a member of a coalition which includes the latter three and Brazil. However, in a quantity leadership game, the Ivory Coast will be better off by being a follower under Brazil's leadership than by herself being a leader or by following Ghana's leadership. (v) Reservation pricing is effective only if it is undertaken by many countries at the same time.
The overall policy recommendation from this study is for the Ivory Coast to limit her export supply capacity to the estimated optimal level of 375,000 metric tons per year (when she acts as a leader) or to seek cooperative solutions with the other major market participants.
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