The newspaper of Imperial College London
Reporter
 Issue 139, 31 March 2004
Contents
£76m centre for clinical imaging«
Tribute to miracle miler Sir Roger«
Harriet’s prime howler!«
International student awards«
Making a grand entrance«
Lowering blood pressure«
It’s a bug’s life«
Will powers IC Trust«
We’re on the map«
Britain the ‘tobacco control time-warp’«
Cutting carbon emissions«
When too much competition can prove unhelpful…«
Emotional intelligence scrutinised«
Move to new headquarters«
Staff Pay and Grading update«
An international night to remember«
Water way to make a splash at College…«
Science soirée at Silwood«
Snap happy…«
In Brief«
Media Spotlight«
Noticeboard«
What’s on«

When too much competition can prove unhelpful…

AN international team of researchers is challenging conventional wisdom that the more competitive a market is, the more successful it will be.

The study, led by staff based at Wye campus, concludes in the current issue of World Development, that greater competition in African cotton market systems is not always linked to better performance. Rather, in situations where the regulatory framework within the sector is weak, a balance must be struck between the degree of competition and coordination between operators.

With African cotton exports in 2002-03 accounting for 20 per cent of total world output and worth an estimated US $1.56 billion, the researchers from six institutions sought to discover what type of market system works best.

By analysing cotton marketing, processing and export in six African countries, the team discovered that unbridled competition can have negative consequences.

While some competition in the cotton sector is desirable to keep producer prices up and encourage innovation, the quality of cotton has to be managed and poor producers need access to production inputs and technical advice, they claim.

Economist and research fellow, Colin Poulton, department of agricultural sciences and lead author of the study explained: “Trade liberalisation in the cotton market is high on the political agenda following the collapse of the world trade talks last autumn. Much attention has been focused on the need to abolish the huge subsidies that countries like the United States and EU give to their farmers.

“Cotton is one of the major exports for almost a third of African countries and it is one of very few commodities in which Africa’s share of world exports has increased over the past 20 years.

“Millions of poor households are heavily dependent on cotton for their livelihoods.

“We’ve looked at how liberalised African cotton sectors can best be organised, so as to continue to compete effectively on the international market and to respond to any new opportunities that arise.”

The researchers identified three distinct types of market structure-concentrated, market-based system, local monopoly system and numerous small players system-that have evolved in response to the challenges of privatisation.

The concentrated, market-based system found in Zambia and Zimbabwe has been most successful in meeting common coordination challenges while still maintaining reasonable prices to consumers, they concluded.

 
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