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Estimating price elasticities of food trade functions: How relevant is the gravity approach?

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  • Femenia, Fabienne
  • Gohin, Alexandre

Abstract

The main objective of the paper is related to the long standing issue of the econometric estimation of price elasticity of food trade functions. We investigate the relevance of the prominent gravity approach. This approach is based on the assumptions of symmetric, monotone, homothetic, CES preferences. We test all these assumptions using European intra trade of cheese. In a general way, all assumptions made on preferences by the gravity approach are not supported by our data set. The bias induced on the estimated price elasticities is not univocal.

Suggested Citation

  • Femenia, Fabienne & Gohin, Alexandre, 2007. "Estimating price elasticities of food trade functions: How relevant is the gravity approach?," Working Papers 7211, TRADEAG - Agricultural Trade Agreements.
    • Handle: RePEc:ags:tragwp:7211
    DOI: 10.22004/ag.econ.7211
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    1. Olper, Alessandro & Raimondi, Valentina, 2002. "Elasticity of trade flow to trade barriers: A comparison among emerging estimation techniques," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44119, European Association of Agricultural Economists.
    2. Houssein Guimbard & David Laborde Debucquet & Cristina Mitaritonna, 2009. "A Picture of Tariff Protection Across the World in 2004 MAcMap-HS6, Version 2," Working Papers 2009-22, CEPII research center.
    3. Alexandre Gohin, 2008. "La sélection des produits agricoles sensibles : le cas européen," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 87(2), pages 49-76.
    4. Gohin, Alexandre, 2008. "La sélection des produits agricoles sensibles : le cas européen," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 87(2).

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