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An econometric study on cotton and textile industries and trade

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  • Yanagishima, Koji

Abstract

A theoretical trade model for vertically integrated markets was developed, assuming near-homogeneity for each commodities, in a non-spatial partial equilibrium framework. Demand for cotton was defined as a derived demand for textile production. Product differentiation assumption allow us to observe multiple commodity prices by type of economic activities. This assumption was adopted to provide a basis for explaining demand, production, and trade activities of the industries. An econometric model was developed and applied to investigate the structural nature of the textile-cotton trade. Macro economic variables and foreign textile market prices were identified to be the major factors causing volatile us cotton market conditions. Effects of textile trade liberalization on the textile cotton industry were measured. A negative welfare effect was estimated for the us cotton industry, while a positive total us welfare effect was estimated.

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Handle: RePEc:ags:aesdoc:307242
DOI: 10.22004/ag.econ.307242
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