earticle

영어

The present study adopts the cobweb theory as a basic model to capture the industrial dynamics in the agriculture industry of Korea. We examine the validity of the theory by analyzing the archival data of agricultural products. Specifically, we pay attention to Korean farmers’ gamesmanship behavior as a characteristic of rational supply chain participants and try to test the conventional wisdom that the Korean government’s intervention in the agricultural market has stimulated farmers’ opportunistic behavior for producing an excessive level of produces. According to the panel data analysis results, an increase in the agricultural commodity’s price in the recent past and farmers’ production quantity have a significant positive association. Yet, the government’s subsidy alone does not seem to induce Korean farmers’ opportunistic behavior. In addition, we show the interaction between the change in prices and the government’s purchase quantity. That is, if the market prices are expected to rise in anticipation that the government may purchase their farm surpluses at better prices farmers make a more aggressive decision on the production for the next season. This outcome may contradict the fundamental goal of the government subsidy, which is the stabilization of the market. Therefore, when the government implements a certain policy, it should consider market dynamics in which the policy affects the policy beneficiaries’ behavior.