Oligopolistic Behavior of Kazakh and Russian Wheat Exporters in the South Caucasus

What is it about?

This study examines whether wheat exporters from Kazakhstan and Russia use their dominant position in the South Caucasus wheat markets to influence prices and competition. By analyzing export market data, we find that Russian exporters have more control over wheat prices in the region, particularly in Armenia, while Kazakh exporters do not seem to have the same level of market power. The study also shows that competition between the two countries depends on the presence of other competitors in each market. Specifically, Kazakh exporters reduce Russian market power in Azerbaijan, while Russian exporters limit Kazakh market position in Azerbaijan and Georgia. Additionally, the study highlights how the war in Ukraine and the blockade of Ukrainian ports are weakening Ukraine's ability to compete, which negatively impacts food security in the South Caucasus.

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Why is it important?

This study offers a unique and timely analysis of the wheat trade dynamics in the South Caucasus, focusing on the market power of Kazakhstan and Russia, two of the region's largest wheat exporters. What sets this work apart is its use of advanced economic models to quantify the market influence of these exporters and assess how their actions affect competition and pricing in the region. The study is especially relevant given the current geopolitical context, with Russia's ongoing war in Ukraine and the blockade of Ukrainian ports significantly impacting global wheat trade. By showing how these disruptions weaken Ukraine’s ability to compete and worsen food security in the South Caucasus, the research underscores the broader consequences of political instability on regional food markets. This work provides valuable insights not only for policymakers and economists but also for anyone concerned with global trade, food security, and the geopolitical risks influencing supply chains today.

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