Assignment, Macro & Micro economics
One commodity on a worldwide basis, discussing supply, demand, price history, market structure, major events, and so on.
Project description
My prof would like you to take a look at one commodity on a worldwide basis, discussing supply, demand, price history, market structure, major events, and so on. Use a few diagrams – clearly a price chart or table, and the same for volume, would be very useful.
Economics 213
Section
A
1
First Assignment
Fall
2013
Scott Beesley
This assignment is due
(on paper
AND via email
–
see below!
)
by the end of the Monday, October
2
8
class.
Note that
“
only”
copies received by the deadline lose 10%. See below for the general late
penalties.
It represents 15% of the course.
This small essay has a limit of
9
00 words. I would like you to take a look at one
commodity
on a
worl
dwide basis, discussing supply, demand, price history, market structure, major events, and so on.
Feel free to use a few diagrams
–
clearly a price chart or table, and the same for volume, would be very
useful. Consider a diagram as 1
5
words.
Because ma
ny people have gone well over the word limit in
the past, I want you to send me a Word copy of your paper, in addition to the paper copy you will hand
in in class.
If your word count is 1150, for example, then I will multiply your gross mark by 900/1150.
So don’t go over the limit!!
The bibliography does not count towards the limit, whether you put it all in
a list at the back, or stick the references into footnotes. Do not put actual content into the footnotes,
either, as I will disregard it in marking.
Many developing countries are dependent on
a small number of commodities for their foreign exchange
earnings. If the developed world exercises market power in the purchase of a commodity, then the
poorer countries are obviously harmed.
Conversely, it is
possible, at least in theory, for the sellers to
form cartels in the manner of OPEC. To my knowledge, however, such attempts have not succeeded.
Even OPEC failed repeatedly, until 1999 onward.
Note that while such actions are illegal
within
OECD
countr
ies, there is no such law across countries (not that we always stop oil company or bank collusion
in any case!). See if you can identify any specific actions that would theoretically be forbidden, if
antitrust law applied internationally.
Please list th
e major suppliers and purchasers, note any formal selling or buying groups, and describe
how concentrated the industry is on each side. Find out whether the industry is significantly affected by
tariff and non
–
tariff trade barriers
, price caps, subsidies,
etc. You might wish to note any technological
factors that have affected the market for your commodity.
The idea is to consider how commodity price and volume issues
,
market power,
and trade barriers
affect
the poorer countries we are studying in this
course. Therefore, if you cover something like oil, where
many suppliers can hardly be called low
–
income nations, then please focus on
some
low
–
income
countries
as a supplier
s
(e.g. Nigeria
, Angola, Ghana,
) or buyer
s
(many LDCs need to import oil).
You co
uld cover any of a wide range of agricultural or mineral commodities, or even fish and livestock.
Try to find price and volume in
formation for at least 20 years
.
Manufactured goods, or services, are not
commodities
! If in doubt about a topic, ask me!
A
commodity will be standardized, traded on
exchanges or in private markets, traded worldwide, etc
. Gold is a commodity, gold jewelry is not!
Finally, make any suggestions you can as to how the commodity sellers might improve their position in
the market.
You could also suggest policies that might be voluntarily undertaken in the OECD countries,
and other big resource importers like China, to help the LDCs.
Papers received after the end of class lose 25%
of whatever their gross mark amounts to
. At midni
ght,
another 25% comes off (so an 80% pa
per received anytime on October 29
gets a net 40%, for
example).
At midnight
at the end of
the 29
th
, the deduction becom
es 75%,
and finally at the end of the 30
th
,
no
credit is given.
These penalties will be
strictly enforced!!