Market, price and trade policies directly affect the prices and amounts of commodities produced or inputs applied. Such policies normally have both domestic and international trade effects. Module 4 provides a framework for analysing market, price and trade policy by posing questions a policy analyst might ask when reviewing policy towards a given commodity, and illustrating some of the methods available for answering them. The module discusses both the extent to which different government objectives can be met by interfering with prices and some of the problems of implementing market, price and trade policies.
In this module we focus mainly on the impact of policy on commodity output levels and prices, but much of the discussion also applies to input quantities and prices. Policy issues relevant to market structures and distribution systems are discussed in module 5.
