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

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Author Info

  • 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. Copyright (c) 2009 The Authors. Journal compilation (c) 2009 The Agricultural Economics Society.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Agricultural Economics.

Volume (Year): 60 (2009)
Issue (Month): 2 ()
Pages: 253-272

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Handle: RePEc:bla:jageco:v:60:y:2009:i:2:p:253-272

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0021-857X

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Cited by:
  1. Novy, Dennis, 2010. "International Trade without CES: Estimating Translog Gravity," CAGE Online Working Paper Series 32, Competitive Advantage in the Global Economy (CAGE).
  2. repec:cge:warwcg:100 is not listed on IDEAS

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