Evaluating the impacts of removing government protection policies in the Iranian wheat market using spatial equilibrium model

Wheat as a strategic product, in terms of production and cultivation, is the most important crops in worldwide and plays an important role in the political and economic arena. According to this issue it is necessary to adjust market by the producers, consumer and national welfares. This study investigated the effect of government support policies in the wheat market by using the spatial equilibrium model and compared the result with liberalized market. Results revealed that imposing both consumer and producer support policies would be accompanied by 3165 tones excess demand in the base year (2013-2014). In the liberalized market, total quantity demanded and supplied would decrease equal to 13.9 and 1.6 percent. Also liberalizing policy would increase consumer price (105.4 percent) and decrease producer price (9.9 percent). Therefore, liberalizing wheat market worse off consumer and producer gain would be negligible. Finally, compensation payment as a complementary policy would be pursue in the short run for the consumers.