The purpose of this study is to simulate the rice policies via
the application of market disequilibrium theory.The estimation
method employed the limited information maximum likelehood(LIML)
to evaluate the rice market disequilibrium model,including the
equations of rice demamd and supply and the new regulations of
agriculture of the General Agreement of Trade and Traiffs(GATT).
The data used by this study were secondary one and came from the
various government publications.The period of annual data was
from 1961 to 1995.There are some major findings from the results
of this study.Firstly, the rice market has the fact of market
disequilibrium due to impose the rice purchase program through
the price guaranteed by government on Taiwan rice market.
Secondly, if Taiwan area becomes a member of World Trade
Organization (WTO) and follows the limited imports of Japan''s
type, then the reasonable rice policy is to keep the current
planned farm policy in Taiwan, i.e.,cancel the subsidies of
feedgrains and relase 10%of quantity of rice imported to the
private rice market.According to the results of this paper,we
may get some implications to the empirical study on Taiwan rice
economics.First of all is very important to apply the theory of
market disequilibrium to analyze the rice economics in Taiwan.
That is to say, we have the other approach to study them, but
the analytic approach is not only a limitation to the theory of
market equilibrium.There is a notion that this study first time
tried to use the method of simulating equilibrium prices to
overcome the problem with unsolutions to the equilibrium prices
under the case disequilibrium. Hence, the results of this study
was affected by this method. This situation may become a
drawback to this study.