State Trading Enterprises and Revenue Gains from Market Power: The Case of Barley Marketing and the Canadian Wheat Board

According to the U.S. General Accounting Office, the Canadian Wheat Board (CWB) is the largest state trading enterprise reporting to the World Trade Organization under Article XVII requirements. This study estimates the market power exerted by the CWB in international barley markets. The analysis incorporates international price discrimination across markets for similar types of barley, the intertwining relationships between feed and malting barley markets, and producer behavior in the absence of the CWB. The CWB was able to capture an annual average of $72 million in additional revenue beyond the amount that would have been generated by purely competitive multiple sellers of Canadian barley during the period 1985-94.