Modelling International Castor Oil Market and Impacts of Changing Policy Scenarios for India

This paper develops an international model of castor oil market in a perfectly competitive framework. The model is then estimated and validated. The empirical model is then used for policy experimentation using simulation teaching. The alternative scenarios considered are: (i) improvement in the extraction efficiency, (ii) devaluation of the rupee, (iii) improved industrial activity in the EEC, and (iv) increase in castor hectarage in China. In cases (i) & (iii) there is a possibility of higher production and exports of castor oil. In case (ii) increase in exports will be marginal but domestic bean and oil prices will increase significantly.