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Performance of the world tin industry : effects of the international tin agreements, 1956-85

University of British Columbia

The thesis presents an analysis of the influence of the international tin agreements (ITA) on the world tin industry between 1956 to 1985. The ITAs, the first of which came into effect in 1956, were jointly operated by tin producing and consuming countries. The International Tin Council (ITC) used a buffer stock and export controls to maintain the price of tin within a band. This experiment in stabilizing tin prices ended in October 1985, when the ITC was unable to continue its operations because it ran out of financial resources. The study first analyzes the market structure of the world tin industry in some detail. Then an econometric model which attempts to capture the behaviour of supply, demand and price of tin over the 30 year period is constructed. Particular attention was paid to the estimation of the tin production functions for major tin producing countries. In many of these countries, the output of the tin depended not only on the price of tin but also on the policies of the ITC as well as the internal political environment of the country. The model is then used to simulate a scenario in which the ITC does not intervene in the tin market. The differences in the price and revenue levels between the actual and simulated scenario are computed. The simulation results show that the tin agreements succeeded in their objective of reducing the variability of price and producers' revenue. In addition, the average level of price and revenues under the ITC regime was higher than under the non-intervention scenario. In evaluating policy options, it was shown that the establishment of a cartel is not viable in the long term for both economic and political reasons. The recommended policy options include improving access to futures markets, providing better transparency of tin market operations, the establishment of government policies which provide better incentives for tin mining and tin using industries in the major tin producing countries and continued efforts in research and development with the aim of lowering costs of production and increasing the uses for tin.

Text

2011-01-14

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http://hdl.handle.net/2429/30631

Business Administration

University of British Columbia

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