A DYNAMIC-MODEL OF OLIGOPOLY IN THE COFFEE EXPORT MARKET

A linear-quadratic, dynamic feedback oligopoly model that nests variou s market structures is used to estimate the degree of competitiveness and the adjustment paths of the two largest coffee exporters, Brazil a nd Colombia. Their estimated behavior is relatively competitive. This subgame perfect dynamic model is compared to a standard static oligopo ly model and the open-loop model (the dynamic generalization of the st andard static model). Both classical and Bayesian tests of open-loop a nd feedback dynamic models are reported.