A bicentenary of coffee in Colombia: competitive strategy and structural change

Abstract

An empirical analysis of the export strategy of Colombia against Brazil in the coffee market during 1826-2018, considering an oligopolistic competition for differentiated products. The relationship of bilateral cointegration of exports according to prices, costs, demand and changes in trade policy was estimated using a dynamic ordinary least squares model. The results suggest that Colombia went from being an incipient exporter and price taker, until becoming an oligopolist of soft coffee before Brazil's valorization policy. After the breakdown of the International Coffee Agreement, starring in an exchange of roles, whose effects are simulated according to a counterfactual scenario.