Price Discrimination in the World Trade of Agricultural Commodities

Abstract Price discrimination between domestic and export markets by exporters of agricultural commodities is a long‐established practice. It has been common for exporters to charge lower prices in world markets than in home markets. In recent years, some countries that are major importers of agricultural products have adopted minimum‐import‐price schemes to insulate their domestic prices from world prices. The effects of such trade barriers on the price‐discrimination practices of exporters is examined. As minimum‐import‐price schemes become more widespread, it may be more profitable for exporters to charge higher prices in export markets than in their own domestic markets. The implications of reversing the direction of price discrimination are explored for exporters, importers employing minimum‐import‐price schemes, and importers with no or minimal trade barriers.