Analytical Study on Companies Act Reform and Informal Economy
May 1, 2012
সম্পদ পাচার ও পুঁজি সৃষ্টির বিভ্রাট – বাজেট পেরিয়ে দৃষ্টিপাত
June 14, 2012

A Decision Support Tool for Government Engagements in Market for Essentials – the case of Food grains in Bangladesh

Sajjad Zohir

Researchers and authors of studies on foodgrain market and on government policies and interventions apparently position themselves as neutral observers. Economists, in particular, tend to distance themselves from policy prescriptions at operational levels since ceteris paribus conditions rarely prevail and probability of prediction error is likely to be fatally high! The paper develops a general framework to guide government actions on markets of essentials where the government has obligation to its citizens to ensure price stability and, at times, to make those essentials accessible to people at less than the market price (or, at zero price). In all such cases, inter-temporal arbitraging, or, spatial arbitraging with significant time lags (between purchase and sale) call for storage demand. Therefore, ex ante decisions based on expectations are unavoidable. In addition, all such instances involve producers (at home and abroad), processors (at home and abroad), consumers at home, and the government as a provider (as arbitrageur in the guise of trader and/or processor).