Price Discrimination and Market Power in the International Wheat Market: the Case of Kazakhstan, Russia and Ukraine
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Price discrimination and market power in the international wheat market: The case of Kazakhstan, Russia and Ukraine Dissertation zur Erlangung des Grades Doktor der Wirtschaftswissenschaft (Dr. rer. pol.) der Juristischen und Wirtschaftswissenschaftlichen Fakultät der Martin-Luther-Universität Halle-Wittenberg Prof. Dr. Thomas Glauben Prof. Dr. Ingo Pies vorgelegt von Diplom-Volkswirt Gulmira Gafarova Halle (Saale), April 23, 2017 1 1 Erster Gutachter: Prof. Dr. Thomas Glauben Zweiter Gutachter: Prof. Dr. Ingo Pies Tag der mündlichen Prüfung: 08.10.2018 Erscheinungsjahr: 2018 2 Table of Contents ACKNOWLEDGEMENTS ....................................................................................................... 6 LIST OF FIGURES .................................................................................................................... 7 LIST OF TABLES ..................................................................................................................... 8 LIST OF TABLES IN APPENDIX ........................................................................................... 8 LIST OF ABBREVIATIONS .................................................................................................... 9 SUMMARY ............................................................................................................................. 11 1 GENERAL INTRODUCTION ......................................................................................... 13 1.1 Problem statement .................................................................................................... 13 1.2 Research objectives .................................................................................................. 16 1.3 Structure of the thesis ............................................................................................... 17 1.4 References ................................................................................................................ 18 2 DESCRIPTIVE ANALYSIS OF THE WHEAT MARKET ............................................ 20 2.1 Descriptive analysis of the world wheat market ....................................................... 20 2.1.1 World wheat production ..................................................................................... 20 2.1.2 World wheat consumption ................................................................................. 22 2.1.3 World wheat trade .............................................................................................. 24 2.2 Descriptive analysis of the KRU wheat market ........................................................ 26 2.2.1 Kazakh wheat market ......................................................................................... 28 2.2.2 Russian wheat market ......................................................................................... 30 2.2.3 Ukrainian wheat market ..................................................................................... 33 2.3 Descriptive analysis of the role of KRU in South Caucasus wheat market ............. 36 2.3.1 Armenian wheat market ..................................................................................... 36 2.3.2 Azerbaijani wheat market ................................................................................... 38 2.3.3 Georgian wheat market ...................................................................................... 40 2.4 References ................................................................................................................ 42 3 3 THEORETICAL AND EMPIRICAL APPROACHES FOR TESTING AND MEASURING PRICE DISCRIMINATION AND MARKET POWER IN THE INTERNATIONAL WHEAT EXPORT MARKETS ............................................................. 43 3.1 A panel test for price discrimination: a pricing-to-market approach ........................ 45 3.2 A time series measure for a potential market power: a residual demand approach . 47 3.3 A static measure of a degree of market imperfection: a market structure approach 49 3.4 References ................................................................................................................ 52 4 PRICE DISCRIMINATION AND PRICING-TO-MARKET BEHAVIOUR OF BLACK SEA REGION WHEAT EXPORTERS .................................................................................. 55 4.1 Introduction .............................................................................................................. 55 4.2 Country Background................................................................................................. 57 4.3 Related Literature ..................................................................................................... 59 4.4 Modelling Approach ................................................................................................. 61 4.5 Data Analysis and Descriptive Statistics .................................................................. 62 4.6 Estimation Results and Discussion ........................................................................... 64 4.7 Conclusion and Policy Implications ......................................................................... 73 4.8 References ................................................................................................................ 76 Appendix .................................................................................................................................. 78 5 ANALYSIS OF OLIGOPOLISTIC BEHAVIOUR OF KAZAKH AND RUSSIAN EXPORTERS IN THE SOUTH CAUCASUS WHEAT MARKET ....................................... 87 5.1 Introduction .............................................................................................................. 87 5.2 Review of Empirical Studies .................................................................................... 89 5.3 Modelling Approach ................................................................................................. 90 5.3.1 Graphical Analysis ............................................................................................. 90 5.3.2 Residual demand elasticity approach ................................................................. 91 5.4 Data sources and descriptive statistics ...................................................................... 93 5.5 Results and discussion .............................................................................................. 94 5.5.1 Russian wheat exports ........................................................................................ 95 4 5.5.2 Kazakh wheat exports ........................................................................................ 99 5.6 Conclusions and Policy Implications ..................................................................... 103 5.7 References .............................................................................................................. 105 Appendix ................................................................................................................................ 107 6 ESTIMATION OF IMPERFECT COMPETITION: A STRUCTURAL ANALYSIS OF THE AZERBAIJANI AND GEORGIAN WHEAT IMPORT MARKETS .......................... 115 6.1 Introduction ............................................................................................................ 115 6.2 Review of Empirical Studies .................................................................................. 116 6.3 Theoretical Framework ........................................................................................... 119 6.3.1 New Empirical Industrial Organization Approach ........................................... 119 6.3.2 Graphical Analysis ........................................................................................... 122 6.4 Data Source ............................................................................................................. 124 6.5 Results and Discussion ........................................................................................... 125 6.5.1 Azerbaijani wheat market ................................................................................. 127 6.5.2 Georgian wheat market .................................................................................... 130 6.6 Conclusion and Policy Implications ....................................................................... 133 6.7 References .............................................................................................................. 135 Appendix ................................................................................................................................ 137 7 CONCLUSIONS ............................................................................................................. 141 7.1 Background on the theoretical framework ............................................................. 141 7.2 Main outcomes, conclusions and recommendations .............................................. 143 5 ACKNOWLEDGEMENTS Undertaking this PhD has been a truly life-changing experience for me and it would not have been possible to do without the support and guidance that I received from many people. Firstly, I would like to express my sincere gratitude to Prof. Dr. Thomas Glauben for all his continuous supervision, valuable feedback on my research and financial support along my PhD study at the Leibniz Institute of Agricultural Development in Transition Economies (IAMO). Without his support