THE FUTURE OF THE WORLD SUGAR MARKET--A SPATIAL PRICE EQUILIBRIUM ANALYSIS
Partial Equilibrium Model
Spatial Price Equilibrium Model
Research Methods/ Statistical Methods
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AbstractA spatial price equilibrium (SPE) model of the world sugar market is programmed. The model covers more than hundred regions and contains sugar in as a sole product. It has a detailed coverage of policies and bilateral trade agreements. It is programmed as a mixed complementarity problem (MCP) in GAMS and uses the PATH solver. The SPE framework offers considerable advantages over other model approaches applied to the sugar market before. Four scenarios are simulated: A baseline scenario until 2015/16, accounting for implementation of the EU reform and market access commitments already decided upon. The liberalization scenarios include an implementation of the Falconer proposal for the current round of WTO negotiations, a full liberalization by the EU and a liberalization of all sugar policies world-wide. In the latter the world market price increases by around 30%. Results are discussed and related to special properties of the SPE approach. Strengths and weaknesses are identified and an outlook on the further refinement of the analysis is given.
TypeConference Paper or Presentation