cotton Producers sell cotton at market prices. When the market price is lower than the target price, the state subsidize the producers in the pilot area according to the factors such as price difference and planting area, production or sales volume.

1, the target price policy hopes to separate from the market. From the content of policy announcement, the target price policy aims at ensuring the basic income of the producers. Markets and policies operate independently of each other. Subjectively, policy does not want to intervene in the market through target price subsidies.

The market is formed through competition and compromise between buyers and sellers. If there is a target price policy and no target price policy, whether the game psychology between the market players is consistent with the final result? The effect of target price policy on the market needs time observation.

2. Target price Policy becomes the next action to absorb the device, reducing the difficulty of the market downward. The market price is determined by the supply relationship, which is determined by the expectation of the market players on the balance between market supply and demand.

from market subject From the perspective of game theory and price formation mechanism, target price policy will lead to different market effects under different market backgrounds. When the market supply is insufficient, the market has the power of action, and the target price policy basically does not play a role in the market. When the market supply and demand balance, the market remains relatively stable, the target price policy plays a relatively limited role in the market.

When the market supply exceeds demand, the market is brewing a larger downward pressure. In order to find pressure energy release, the pressure operation target is easy to break through or squeeze the market space. Financial subsidies outside the market system provide potential subsidised space for subsidised people, and become a downward pressure on the market to release potential targets.

Cotton farmers are located at the front-end of the industrial chain. The seed cotton market price is the basis of the lint market. When the market moves down, the target price policy becomes the next action absorption device, which reduces the difficulty of the market downward, and to a certain extent, leads the market down passively. The more the target price is higher than the market price, the easier the market will fall. At the same time, if the effective stock consumption is relatively high, the two will form a downward pressure.