Nexus between Export Demand, Elasticity in Supply, and the Degree of Buyers' Collusion in Agricultural Market

The present article finds an interesting relationship between export demand, elasticity in supply but lower response towards the change in the equilibrium price variation, and a relatively low degree of collusion in the agricultural market. The study has been done in two sets of the market of potatoes in India. Set one consists of the export-centric markets that meet domestic and international demand and set two is meeting only domestic demand. It has been found that the markets that are meeting both domestic, as well as international demand, have a relatively low degree of collusion though supply is almost perfectly inelastic. The findings show that export demand does not create competition rather buyers’ have been able to create collusion to hold control over the market. As a result, producers did not find an incentive to supply. On the other hand, the markets that are meeting only domestic demand have a relatively high degree of collusion. Here the supply is relatively elastic. In short, the article concludes that the markets with international demand fail to create competition and make supply inelastic opposite true in domestic demand-centric markets