IDEAS home Printed from
   My bibliography  Save this article

Explaining Armington: What Determines Substitutability Between Home and Foreign Goods?


  • Bruce A. Blonigen
  • Wesley W. Wilson


For decades trade economists have modeled imperfect substitution between home and foreign goods in consumption (often called the Armington assumption) with little analysis of what explains the wide variation in these substitution elasticities across sectors. Using a varying coefficients model, the authors estimate Armington elasticities between U.S. domestic and foreign goods across over one hundred industrial sectors from 1980 to 1988 and examine the role of product, industry, political, and 'home bias' factors as determinants. They find strong support that the presence of foreign-owned affiliates affects Armington elasticities in important ways, and some support that entry barriers and union presence have an effect.

Suggested Citation

  • Bruce A. Blonigen & Wesley W. Wilson, 1999. "Explaining Armington: What Determines Substitutability Between Home and Foreign Goods?," Canadian Journal of Economics, Canadian Economics Association, vol. 32(1), pages 1-21, February.
  • Handle: RePEc:cje:issued:v:32:y:1999:i:1:p:1-21

    Download full text from publisher

    File URL:
    File Function: Full text
    Download Restriction: Available to subscribers only. Alternative access through JSTOR and Ingenta.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Shubik, Martin & Wooders, Myrna Holtz, 1983. "Approximate cores of replica games and economies. Part I: Replica games, externalities, and approximate cores," Mathematical Social Sciences, Elsevier, vol. 6(1), pages 27-48, October.
    2. Wooders, Myrna Holtz, 1988. "Stability of jurisdiction structures in economies with local public goods," Mathematical Social Sciences, Elsevier, vol. 15(1), pages 29-49, February.
    3. Martin Shubik & Myrna Holtz Wooders, 1982. "Near-Markets and Market Games," Cowles Foundation Discussion Papers 657, Cowles Foundation for Research in Economics, Yale University.
    4. Berglas, Eitan & Pines, David, 1981. "Clubs, local public goods and transportation models : A synthesis," Journal of Public Economics, Elsevier, vol. 15(2), pages 141-162, April.
    5. Barham, V. & Wooders, M.H., 1994. "First and Second Welfare Theorems for Economies with Collective Goods," Working Papers 9415e, University of Ottawa, Department of Economics.
    6. Wooders, Myrna Holtz, 1983. "The epsilon core of a large replica game," Journal of Mathematical Economics, Elsevier, vol. 11(3), pages 277-300, July.
    7. Cole, Harold L. & Prescott, Edward C., 1997. "Valuation Equilibrium with Clubs," Journal of Economic Theory, Elsevier, vol. 74(1), pages 19-39, May.
    8. Kaneko, Mamoru & Wooders, Myrna Holtz, 1982. "Cores of partitioning games," Mathematical Social Sciences, Elsevier, vol. 3(4), pages 313-327, December.
    9. Kovalenkov, A. & Wooders, M.H., 1997. "Three Theorems on Non-Emptiness of Approximate Cores: Part 1. Game Theoretic Results," UFAE and IAE Working Papers 390.97, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    10. John P. Conley & Myrna Wooders, 1998. "Anonymous Lindahl Pricing in a Tiebout Economy with Crowding Types," Canadian Journal of Economics, Canadian Economics Association, vol. 31(4), pages 952-974, November.
    11. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    12. Kaneko, Mamoru & Wooders, Myrna Holtz, 1996. "The Nonemptiness of the f-Core of a Game without Side Payments," International Journal of Game Theory, Springer;Game Theory Society, vol. 25(2), pages 245-258.
    13. Wooders, Myrna Holtz, 1989. "A Tiebout theorem," Mathematical Social Sciences, Elsevier, vol. 18(1), pages 33-55, August.
    14. Rajiv Vohra, 1990. "On the Inefficiency of Two-Part Tariffs," Review of Economic Studies, Oxford University Press, vol. 57(3), pages 415-438.
    15. Conley, John P. & Wooders, Myrna, 1996. "Taste-homogeneity of optimal jurisdictions in a Tiebout economy with crowding types and endogenous educational investment choices," Ricerche Economiche, Elsevier, vol. 50(4), pages 367-387, December.
    16. Boadway, Robin, 1980. "A note on the market provision of club goods," Journal of Public Economics, Elsevier, vol. 13(1), pages 131-137, February.
    17. Bruce W. Hamilton, 1975. "Zoning and Property Taxation in a System of Local Governments," Urban Studies, Urban Studies Journal Limited, vol. 12(2), pages 205-211, June.
    18. Myrna Holtz Wooders, 1992. "Large Games and Economies With Effective Small Groups," Discussion Paper Serie B 215, University of Bonn, Germany, revised Aug 1992.
    19. Scotchmer, Suzanne & Wooders, Myrna Holtz, 1987. "Competitive equilibrium and the core in club economies with anonymous crowding," Journal of Public Economics, Elsevier, vol. 34(2), pages 159-173, November.
    20. Myrna Holtz Wooders, 1996. "Equivalence of Lindahl equilibrium with participation prices and the core (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 9(1), pages 115-127.
    21. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
    22. Robert W. Helsley & William C. Strange, 1991. "Exclusion and the Theory of Clubs," Canadian Journal of Economics, Canadian Economics Association, vol. 24(4), pages 889-899, November.
    23. Wooders, Myrna, 1978. "Equilibria, the core, and jurisdiction structures in economies with a local public good," Journal of Economic Theory, Elsevier, vol. 18(2), pages 328-348, August.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cje:issued:v:32:y:1999:i:1:p:1-21. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prof. Werner Antweiler). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.