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Armington Elasticities and Tariff Regime: An Application to European Union Rice Imports


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  • Marilyne Huchet-Bourdon
  • Esmaeil Pishbahar


The European Union's (EU) import sources for rice include developing countries and least developed countries (LDCs). The EU has made a commitment to allow duty-free and quota-free access to rice imports originating in the LDCs from September 2009 onward. The purpose of this article is to answer two questions: (1) does the inclusion of import tariffs lead to different estimated Armington elasticities? (2) when a discriminating tariff is introduced, what happens to the market share of large rice exporters to the EU, especially of poor countries? We present the Armington model, derived from a constant elasticity of substitution (CES) utility function, and a non-homothetic CES utility functional form, which is more flexible. We then estimate the Armington model, with and without the inclusion of a tariff, and we compare the elasticities. Lastly, we model five scenarios with different discriminated import tariff rates to calculate the changes in the market access of large rice exporters to the EU. Our empirical results show the importance of non-homothetic preferences and import tariffs. Ignoring import tariffs and the non-homothetic parameter may produce results which are biased and of uncertain validity. Furthermore, the simulation findings demonstrate that, in spite of a large difference between import tariff rate of Suriname and other countries (scenario V), its market access would not change greatly. This may be caused by supply side problems like poor infrastructures, weak technology and small capacity production in LDCs. Copyright (c) 2009 The Authors. Journal compilation (c) 2009 The Agricultural Economics Society.

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

Volume (Year): 60 (2009)
Issue (Month): 3 ()
Pages: 586-603

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Handle: RePEc:bla:jageco:v:60:y:2009:i:3:p:586-603

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  1. Ito, Shoichi & Chen, Dean T. & Peterson, E. Wesley F., 1990. "Modeling international trade flows and market shares for agricultural commodities: a modified Armington procedure for rice," Agricultural Economics, Blackwell, vol. 4(3-4), pages 315-333, December.
  2. Cezary A. Kapuscinski & Prof Peter G. Warr, 1996. "Estimation of Armington Elasticities: An Application to the Philippines," Trade and Development 96/8, Australian National University, Department of Economics.
  3. Yves Surry & Nadine Herrard & Yves Le Roux, 2003. "Modelling trade in processed food products: an econometric investigation for France," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(4), pages 571-571, December.
  4. Mika Saito, 2004. "Armington elasticities in intermediate inputs trade: a problem in using multilateral trade data," Canadian Journal of Economics, Canadian Economics Association, vol. 37(4), pages 1097-1117, November.
  5. Gallaway, Michael P. & McDaniel, Christine A. & Rivera, Sandra A., 2003. "Short-run and long-run industry-level estimates of U.S. Armington elasticities," The North American Journal of Economics and Finance, Elsevier, vol. 14(1), pages 49-68, March.
  6. El-Agraa,Ali (ed.), 2007. "The European Union," Cambridge Books, Cambridge University Press, number 9780521874434, October.
  7. Mika Saito, 2004. "Armington Elasticities in Intermediate Inputs Trade," IMF Working Papers 04/22, International Monetary Fund.
  8. Yves Surry & Nadine Herrard, 2002. "Modelling trade in processed food products: an econometric investigation for France," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(1), pages 1-28, March.
  9. Yang, Seung-Ryong & Koo, Won W., 1993. "A generalized armington trade model: Respecification," Agricultural Economics, Blackwell, vol. 9(4), pages 347-356, December.
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