COMBINATIONS OF BUFFER‐STOCKS AND BUFFER‐FUNDS FOR WOOL PRICE STABILISATION IN AUSTRALIA*

In this paper a preliminary analysis is presented of a combined buffer‐fund and buffer‐stock as an alternative to a pure buffer‐fund or a pure buffer stock for stabilising wool prices. The alternatives analysed are designed so that each provides the same prices to producers as did the Reserve Price Scheme over the period of analysis. Least‐cost combinations of policy instruments are derived. The results show that there is considerable potential for cost savings to be made by combining buffer‐fund and buffer‐stock instruments.