SOME OLD TRUTHS REVISITED

Abstract

The primary objective in this paper is to 'promote' the use of equilibrium displacement modeling, or comparative static analysis of general function models, as a research tool in agricultural price and policy analyses. This is by no means a new tool, but it does seem to be used much less in Australia than it is in the US where it has been the basis of several important journal papers in recent times, The paper includes applications to: (a) reproduce important results obtained by Euse (1958) regarding total elasticities; and (b) examine the price premium argument that has been advanced in favour of single-desk selling arrangements. The latter is the secondary objective in the paper. Whilst equilibrium displacement modelling has its shortcomings, it is a research tool that can provide useful results with few assumptions. It can be a substitute for econometric modelling when resource and time constraints are binding. The application to the price-premium argument re-confirms the doubts that many analysts have expressed about single-desk selling