Price Intervention by Exporting Countries and the Effects on Price Instability

The analysis examines the effects of alternative price interventions by exporters on the mean level of prices and price instability. While several different price policies can be used by an exporter to protect producers of a commodity, each policy has unique effects on mean prices and variability. Using free trade as a point of comparison, five policy options, ranging from fixed prices in the exporter to export subsidies, are compared. These comparisons should be useful as multilateral trade negotiations proceed.