Eastern Europe
Polish agriculture

While most East European agricultural sectors are dominated by state-controlled enterprises with significant market power, Poland has a large number of small, privately-owned farms, although its agricultural input and food processing and distribution sectors are still monopolistic and inefficient. In Discussion Paper No. 622, Research Fellow Larry Karp and Spiro Stefanou assemble Polish economic data to assess the impact of the recent reforms on agriculture. They find little evidence of a recovery, but the decline seems to have halted. They discuss policy issues entailed by agricultural reform, emphasizing the regulation of the monopolistic input and processing sectors, and review the evidence for the existence and nature of these monopolies and summarize the goals of the main regulatory body, the Antimonopoly Office. They use a variety of recent models of industrial organization, dealing with entry, horizontal mergers and vertical control, to examine Polish regulatory policy. While they recognize the danger that the application of simple rules may lead to incorrect decisions, as highlighted in recent theoretical work, their results indicate that the disadvantages of discretionary policy in particular the high level of uncertainty and incentives for rent seeking are likely to be greater.

Dr Karp will present his paper at a March lunchtime meeting, to be reported more fully in the next issue of this Bulletin.