Government purchases at the supporting price has been one of the most important rice policy instruments in Taiwan. The impact of the purchase policy is often discussed and surveyed. However, the issues whether this policy has succeeded in raising the rice price and farmers' income still remain controversial. The literature review on the analysis of Taiwan's rice policies in the past reveals some shortcomings. This study attempted to introduce a research approach which improves the method in analysis of Taiwan's rice market and helps evaluate the impact of government's rice policy. In this paper, two concepts were introduced to analyze the rice market in Taiwan. At first, the "quantity effect" of government net purchases on the demand side and the "sudsidy effect" of the supporting price on the supply side were dissuced. Secondly, two supply curves were derived. One was based on the price received by farmers (i.e. weighted average of market price and supporting price). The other one was based on the market price. Only the latter one (together with the demand curve) can determine the equilibrium market price. These two curves both interpret the rice supply respondence under the present policy. They are correlated simultaneously to the level of the supporting price and the quantity of government purchases. In this study, in comparison with non-intervention of the government, the effects of the present government rice policy were found as follows: 1.The subsidy of the supporting price induces the supply curve based on the market price to shift to the right. 2.The total demand curve shifts to the right due to the governmnet positive net purchases. 3.The supply quantity increases. 4.The farmers' received price and returns increase. 5.The market price of rice may not necessarily decrease. This depends on the quantity of deovernment net purchases and the increase of supply quantity due to the subsidy of the government supporting price. When the quantity of government net purchases is more than the increase of supply quantity, the market price increases. Otherwise, it decreases. 6.When the market price increases, the consumption decreases, and vice versa.