The paper incorporates a specification of the rice market and models the government price-support, stocking, and trade policies for rice using a mixed complementarity approach. The general equilibrium approach captures and quantifies the effects of the price support policies on resource allocation, trade, relative prices, and the government budget. An important result is that there is inefficient allocation of resources within the agriculture sector and the rest of the economy if Bulog operates to maintain the rice price when there are significant increases in rice productivity. In addition, the price support program is costly and strains the government accounts, even if the administrative costs of operating the program are ignored. Download full-text discussion paper .
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