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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

Abstract

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.

Suggested Citation

  • Marilyne Huchet-Bourdon & Esmaeil Pishbahar, 2009. "Armington Elasticities and Tariff Regime: An Application to European Union Rice Imports," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(3), pages 586-603.
  • Handle: RePEc:bla:jageco:v:60:y:2009:i:3:p:586-603
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    References listed on IDEAS

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    Cited by:

    1. Lisa Aspalter, 2016. "Estimating Industry-level Armington Elasticities For EMU Countries," Department of Economics Working Papers wuwp217, Vienna University of Economics and Business, Department of Economics.
    2. Aspalter, Lisa, 2016. "Estimating Industry-level Armington Elasticities For EMU Countries," Department of Economics Working Paper Series 4838, WU Vienna University of Economics and Business.

    More about this item

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • D1 - Microeconomics - - Household Behavior
    • F1 - International Economics - - Trade
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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