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The Impossibility of Addressing Undernourishment in the Presence of Perfect Competition Alone
Dr Jose Ma. Luis P. Montesclaros Research Fellow
Dr Jose Ma. Luis P. Montesclaros
1
This is a planned journal article.
Market outcomes of supply of food, and food prices, appear to have stabilised at a sub-optimal level that translates to a 10.7% global undernourishment prevalence with 0% year-to-year progress since 2015. Given concave demand functions, this means that a pareto-improvement exists, except that it is undetected in the current system that measures food demand ex-post rather than ex-ante. To illustrate this, the paper constructs a simple model that links undernourishment outcomes to consumption levels and food prices; food prices to supplies; supplies to the optimal levels of use of factors of production; and the use of factors of production to production costs and prices. It then presents an impossibility theorem that in the presence of consumption gaps within a pre-existing market equilibrium, it is impossible for a perfectly competitive market to eventuate non-zero levels of undernourishment, even if this would have been the true pareto improvement.
Market outcomes of supply of food, and food prices, appear to have stabilised at a sub-optimal level that translates to a 10.7% global undernourishment prevalence with 0% year-to-year progress since 2015. Given concave demand functions, this means that a pareto-improvement exists, except that it is undetected in the current system that measures food demand ex-post rather than ex-ante. To illustrate this, the paper constructs a simple model that links undernourishment outcomes to consumption levels and food prices; food prices to supplies; supplies to the optimal levels of use of factors of production; and the use of factors of production to production costs and prices. It then presents an impossibility theorem that in the presence of consumption gaps within a pre-existing market equilibrium, it is impossible for a perfectly competitive market to eventuate non-zero levels of undernourishment, even if this would have been the true pareto improvement.
| Theme: | International Political Economy / Non-Traditional Security |
| Region: | Global |
| Entity: | NTS Centre |
