Abstract:
The problems arising due to the possibility of alternative equilibriums in agricultural and food markets is addressed. Economic threats induced by the phenomenon of alternative equilibriums are quantified, using food markets in Belarus, Kazakhstan and Russian Federation as an example. Counter-arguments are formulated regarding to the position of J. Schumpeter with respect to the question about methodological meaning of uniqueness of competitive equilibrium. An alternative position is justified suggesting that uniqueness of competitive equilibrium cannot be thought about as either required or desirable outcome of a theoretical analysis aimed at an adequate description of the economic reality. Addressing a practical problem of agricultural and food policy analysis by means of a computable partial equilibrium model, the existence of alternative equilibriums in the food markets of the three countries-founders of Eurasian Economic Union is demonstrated. The outcome of the model enlightens important differences between alternative equilibrium states with respect to prices, amounts of production and consumption. The characteristics of some equilibriums are such that they are not acceptable from the point of view of practical economic policy. It is shown that elimination of trade barriers between the three countries shrinks the set of achievable equilibriums, insofar reducing the uncertainty of consequences of the tested agricultural and food policy. However, lower uncertainty is achieved at the cost of sorting out relatively preferable equilibriums. It is recommended to co-ordinate in time the activities aimed at eliminating trade barriers with those aimed at improving competitiveness of the sectors under the risk of recession in the case of unfavorable equilibrium. The research tasks are identified (at a first approximation) aimed at outlining an administrative ruleset that preserves free pricing within a certain framework that censores out the price systems associated with unfavorable equilibriums.
