Empirical investigation of competition in Japan's raw cotton market: Implications for US cotton exports

Abstract

Under Japan's current agricultural trade policy, the raw cotton market is efficient and competitive. With Japan's declining cotton market, the United States faces strong competition from Australia, China, and Pakistan. Empirical results reveal that: US cotton competes with cotton from Australia, China, and Pakistan but complements that from Egypt, Sudan, and the rest of the world; Japan's demand for US cotton appears to be inelastic; by lowering prices, the United States could effectively reduce Japan's imports from Australia, China, and Pakistan; and Japan would prefer to import long-staple cotton if its import expenditures increased. © 1996 John Wiley & Sons, Inc.