Economics Commodity Assignment

Economics 213 Section B1 Commodity Assignment Winter 2020 Scott Beesley
This assignment is due (on paper AND via email – see below!) by the end of the Friday, March 13 class.
Note that “email only” copies received by the deadline lose 10%. See below for the general late
penalties. It represents 15% of the course.
This small essay has a limit of 900 words. I would like you to take a look at one commodity on a
worldwide basis, discussing supply, demand, price history, market structure, major events, and so on.
Do NOT just cover one country! (e.g. Chile is a big copper producer, but it is not “the copper market.”)
Feel free to use a few diagrams – clearly a price chart or table, and the same for volume, would be very
useful. Consider a diagram as 15 words. Because many people have gone well over the word limit in
the past, I want you to send me a Word copy of your paper, in addition to the paper copy you will hand
in in class. If your word count is 1150, for example, then I will multiply your gross mark by 900/1150.
So don’t go over the limit!! The bibliography does not count towards the limit, whether you put it all in
a list at the back, or stick the references into footnotes. Do not put actual content into the footnotes,
either, as I will disregard it in marking. (Don’t try to claim that a 50-word caption is part of a “diagram”!)
Many developing countries are dependent on a small number of commodities for their foreign exchange
earnings. If the developed world exercises market power in the purchase of a commodity, then the
poorer countries are obviously harmed. Conversely, it is possible, at least in theory, for the sellers to
form cartels in the manner of OPEC. To my knowledge, however, such attempts have not succeeded.
Even OPEC failed repeatedly, until 1999 onward. Note that while such actions are illegal within OECD
countries, there is no such law across countries (not that we always stop oil company or bank collusion
in any case!). See if you can identify any specific actions that would theoretically be forbidden, if
antitrust law applied internationally.
Please list the major suppliers and purchasers, note any formal selling or buying groups, and describe
how concentrated the industry is on each side. Find out whether the industry is significantly affected by
tariff and non-tariff trade barriers, price caps, subsidies, etc. You might wish to note any technological
factors that have affected the market for your commodity.
The idea is to consider how commodity price and volume issues, market power, and trade barriers affect
the poorer countries we are studying in this course. Therefore, if you cover something like oil, where
many suppliers can hardly be called low-income nations, then please focus on some low-income
countries as a suppliers (e.g. Nigeria, Angola, Ghana,) or buyers (many LDCs need to import oil).
You could cover any of a wide range of agricultural or mineral commodities, or even fish and livestock.
Try to find price and volume information for at least 20 years. Manufactured goods, or services, are not
commodities! If in doubt about a topic, ask me! A commodity will be standardized, traded on
exchanges or in private markets, traded worldwide, etc. Ex.: Gold is a commodity, gold jewelry is not!
Finally, make any suggestions you can as to how the commodity sellers might improve their position in
the market. You could also suggest policies that might be voluntarily undertaken in the OECD countries,
and other big resource importers like China, to help the LDCs.
Papers received after the end of class lose 25% of whatever their gross mark amounts to. At midnight,
another 25% comes off (so an 80% paper received anytime on March 14 gets a net 40%, for example). At
midnight at the end of the 14th, the deduction becomes 75%, and finally after the end of March 15, no
credit is given.
NOTE that this paper needs to consist of your own writing – cutting and “pasting in” sentences and
paragraphs is plagiarism and could result in a zero for the paper, or even course failure. Some people
paste in sentences then change them a bit – this usually results in a strange, unorganized sort of paper,
and gets a low mark.