Vader, I took your advice and read Wilson’s report closely. I think you misunderstood some of it.
ONE – Wilson said:
"Effects of Canadian offers in bid functions were not statistically different from U.S. origins"
You said:
This has been confirmed by many NAFTA challenges wherein the CWB has been found over and over to be a fair trader and that they operate in a commercial fashion.
Does this not also suggest that the CWB does not get a premium?
TWO – You said:
“Table 2 on page 9 shows a range of expected profits by firms bidding on the same contract.” And “For HRS wheat this function varies from a low of $.82 to a high of $10.48.”
These values are the difference between the tender bids for each bidder and the “Cost Indicator” – B-C. This is NOT the expected profit margin. For HRS wheat the cost indicator was the C&F value – NOT the replacement cost for the firm. For HRW, the cost indicator is Kansas futures. These relationships were explored to see if bidding behaviour could be predicted – not to indicate profits (because they don’t).
THREE
Interesting to also look at the standard deviation of B-C – also found in table 2 on page 9. When the B-C value was 10.48 (the one you referred to), the standard deviation was 22.89. This suggests that the mean bid was 10.48 above the cost indicator; the standard deviation being larger than 10.48 suggests some bids were even below the cost indicator. Wilson indicated that these ranges in bids demonstrated the wide range in costs between bidders.
FOUR
Interesting to note Figures 10 and 11 on page 17, showing tender bids for HRS and CWRS in Figure 10 and HAD and CWAD in Figure 11. No sign of premiums for Canadian wheat here.
FIVE
Also – According to Wilson: “These results indicate that a supplier’s bid function is not affected by whether Canadian origin is offered as an alternative. This suggests that the supplier’s bidding behaviour is the same for U.S. or Canadian wheats. Strategically, this suggests that at least in this market which uses very micro-data, there is no evidence that Canadian wheat is sold at a premium.” (Page 18)
ONE – Wilson said:
"Effects of Canadian offers in bid functions were not statistically different from U.S. origins"
You said:
This has been confirmed by many NAFTA challenges wherein the CWB has been found over and over to be a fair trader and that they operate in a commercial fashion.
Does this not also suggest that the CWB does not get a premium?
TWO – You said:
“Table 2 on page 9 shows a range of expected profits by firms bidding on the same contract.” And “For HRS wheat this function varies from a low of $.82 to a high of $10.48.”
These values are the difference between the tender bids for each bidder and the “Cost Indicator” – B-C. This is NOT the expected profit margin. For HRS wheat the cost indicator was the C&F value – NOT the replacement cost for the firm. For HRW, the cost indicator is Kansas futures. These relationships were explored to see if bidding behaviour could be predicted – not to indicate profits (because they don’t).
THREE
Interesting to also look at the standard deviation of B-C – also found in table 2 on page 9. When the B-C value was 10.48 (the one you referred to), the standard deviation was 22.89. This suggests that the mean bid was 10.48 above the cost indicator; the standard deviation being larger than 10.48 suggests some bids were even below the cost indicator. Wilson indicated that these ranges in bids demonstrated the wide range in costs between bidders.
FOUR
Interesting to note Figures 10 and 11 on page 17, showing tender bids for HRS and CWRS in Figure 10 and HAD and CWAD in Figure 11. No sign of premiums for Canadian wheat here.
FIVE
Also – According to Wilson: “These results indicate that a supplier’s bid function is not affected by whether Canadian origin is offered as an alternative. This suggests that the supplier’s bidding behaviour is the same for U.S. or Canadian wheats. Strategically, this suggests that at least in this market which uses very micro-data, there is no evidence that Canadian wheat is sold at a premium.” (Page 18)
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