ABSTRACT
This chapter reviews factors and mechanisms behind the formation of SR and NR prices. It then considers market regulation to stabilize prices, notably under the International Natural Rubber Regulation Agreements from the early 1980s. The price formation processes of SR and NR with their different supply conditions, market structures, and government interventions are now considered in turn. It is useful to distinguish two main phases in SR price formation. It should also be observed, however, that a possible third phase in SR price formation is occurring in the 1990s, as the supply of elastomers has dropped erratically in Eastern Europe and impelled considerable price changes. The programme aimed both to reduce output and to raise long-term productivity through replanting old trees, and was launched following the steep NR price decline succeeding the first oil shock. These discussions of market regulation close the segment-by-segment analysis of the world rubber industry.
