THE UNITED STATES IN THE GLOBAL SOYBEAN MARKET: WHERE DO WE GO FROM HERE?

This study applies the concept of a dynamic dominant-firm oligopoly model to the international soybean market. It has been suggested that the international soybean market should be viewed as an oligopoly among exporting nations. Consistent with Gaskins (1971) dynamic dominant firm model, our results indicate that the current U.S. loan deficiency-payment prices and their predecessors created an environment in which smaller (fringe) exporters could prosper and expand. The reduction of U.S. market share is thus a logical outcome of an "optimally managed decline" a la Gaskins. The study finds U.S. market share to decline at a reducing rate and predicts U.S. market share eventually to stabilize, given the expanding international market for soybeans and products. Recognition of the structure of international soybean market has policy implications for the 2002 farm program as the classic dominant firm model suggests.