Food security, welfare, and partial de-regulation of parastatals

Abstract

Complete de-regulation of parastatals is often advocated as a desirable reform, although it is usually opposed by vested interests and by those who perceive that the de-regulated market can be dominated by a small number of private firms. In practice, however, reform and de-regulation of parastatals is typically partial in nature. We specify a model that allows us to consider the effects of partial reform and partial de-regulation on various metrics of food security. We show that how these metrics change depends on the market structure that defines the starting point as well as the market structure that emerges after de-regulation. In this second-best world, partial de-regulation does not necessarily enhance food security and we identify the determinants of that outcome. The assessment of the desirability of de-regulation is also contingent on the food security metric used.