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Estimating Price Elasticities of Food Trade Functions: How Relevant is the CES‐based Gravity Approach?

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  • Alexandre Gohin
  • Fabienne Féménia

Abstract

The main objective of this article is to examine econometric estimates of price elasticities of food trade functions. We investigate the relevance of the prominent gravity approach. This approach is based on the assumptions of symmetric, monotone, homothetic, Constant Elasticity of Substitution (CES) preferences. We test all these assumptions using intra‐European trade in cheese. In general, the assumptions made on preferences by the gravity approach are not supported by our dataset. The bias induced in the estimated price elasticities is ambiguous.

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  • Alexandre Gohin & Fabienne Féménia, 2009. "Estimating Price Elasticities of Food Trade Functions: How Relevant is the CES‐based Gravity Approach?," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(2), pages 253-272, June.
    • Handle: RePEc:bla:jageco:v:60:y:2009:i:2:p:253-272
    DOI: 10.1111/j.1477-9552.2009.00199.x
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    2. Rodrigo García Arancibia & Edith Depetris Guiguet, 2020. "Brazilian Import Demand of Dairy Products with Emphasis in the Mercosul Context [Demanda brasileira de importações de laticínios com ênfase no contexo do Mercosul]," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 30(2), pages 551-577, May-Augus.
    3. Rodrigo Garc?a Arancibia, 2019. "Import Demand for Dairy Products in Chile and Competition among Exporting Countries: The Case of Milk Powder and Cheese," Economia agro-alimentare, FrancoAngeli Editore, vol. 21(1), pages 101-128.
    4. repec:lic:licosd:33913 is not listed on IDEAS
    5. Tanrattanaphong, Borworn & Hu, Baiding & Gan, Christopher, 2020. "The impacts of value chain upgrading on the export of processed food," Food Policy, Elsevier, vol. 93(C).
    6. Curzi, Daniele & Pacca, Lucia, 2015. "Price, quality and trade costs in the food sector," Food Policy, Elsevier, vol. 55(C), pages 147-158.
    7. Lota Dabio Tamini & Sorgho Zakaria, 2016. "Trade in environmental goods: how important are trade costs elasticities?," Cahiers de recherche CREATE 2016-3, CREATE.
    8. Curzi, Daniele & Pacca, Lucia, 2014. "Estimating Food Quality from Trade Data: An Empirical Assessment," 2014 Third Congress, June 25-27, 2014, Alghero, Italy 173106, Italian Association of Agricultural and Applied Economics (AIEAA).
    9. Lota D. Tamini & Zakaria Sorgho, 2018. "Trade in Environmental Goods: Evidences from an Analysis Using Elasticities of Trade Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(1), pages 53-75, May.
    10. Robert Feenstra & Chang Hong, 2022. "China’s import demand for agricultural products: The impact of the Phase One trade agreement," Review of International Economics, Wiley Blackwell, vol. 30(1), pages 345-368, February.

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