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The application of spatial models in the analysis of bilateral trade flows: An alternative to the Armington approach for the world sugar market

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  • Nolte, Stephan

Abstract

This paper suggests spatial models as an alternative to the Armington approach to model bilateral trade. While the use of spatial models has been accepted for decades, they are rarely chosen for such analyses. However, problems inherent in the application of the Armington approach can be overcome through the use of spatial models. To demonstrate, a simple spatial model of the world sugar market is built and used to simulate a multilateral liberalization scenario. Additionally, an identical model is constructed, applying the Armington approach. The results of the spatial model of the sugar market are found to be more plausible than those generated by the Armington-based model.

Suggested Citation

  • Nolte, Stephan, 2006. "The application of spatial models in the analysis of bilateral trade flows: An alternative to the Armington approach for the world sugar market," Working Paper Series 10288, Humboldt University Berlin, Department Agricultural Economics.
  • Handle: RePEc:ags:huiawp:10288
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    File URL: http://purl.umn.edu/10288
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    References listed on IDEAS

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    1. Odening, Martin & Musshoff, Oliver & Huettel, Silke, 2003. "Empirische Validierung von Realoptionsmodellen," Working Paper Series 18825, Humboldt University Berlin, Department Agricultural Economics.
    2. von Witzke, Harald & Kirschke, Dieter & Lotze-Campen, Hermann & Noleppa, Steffen, 2005. "The Economics of Alternative Strategies for the Reduction of Food-borne Diseases in Developing Countries: The Case of Diarrhea in Rwanda," Working Paper Series 18830, Humboldt University Berlin, Department Agricultural Economics.
    3. Grethe, Harald, 2004. "Turkey's Accession to the EU: What Will the Common Agricultural Policy Cost?," Working Paper Series 18821, Humboldt University Berlin, Department Agricultural Economics.
    4. Musshoff, Oliver & Hirschauer, Norbert & Palmer, Ken, 2002. "Bounded Recursive Stochastic Simulation - A Simple and Efficient Method for Pricing Complex American Type Options," Working Paper Series 18823, Humboldt University Berlin, Department Agricultural Economics.
    5. Gohin, Alexandre & Bureau, Jean-Christophe, 2005. "Sugar Market Liberalization: Modeling the EU Supply of "C" Sugar," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24740, European Association of Agricultural Economists.
    6. Arbenser, Lawrence, 2004. "A General Equilibrium Analysis of the Impact of Inward FDI on Ghana: The Role of Complementary Policies," Working Paper Series 18829, Humboldt University Berlin, Department Agricultural Economics.
    7. van Berkum, Siemen & Roza, Pim & van Tongeren, Frank W., 2005. "Impacts of the EU sugar policy reforms on developing countries," Report Series 29139, Agricultural Economics Research Institute.
    8. Weber, Gerald, 2003. "Internationaler Handel und multifunktionale Landwirtschaft : Ein Agrarsektormodell zur Analyse Politischer Optionen und Entscheidungsunterstutzung," Working Paper Series 18824, Humboldt University Berlin, Department Agricultural Economics.
    9. Kerkelä, Leena & Huan-Niemi, Ellen, 2005. "Trade Preferences in the EU Sugar Sector: Winners and Losers," Discussion Papers 358, VATT Institute for Economic Research.
    10. Odening, Martin, 2000. "Der Optionswert von Sachinvestitionen - Theoretischer Hintergrund und Bewertungsmethoden," Working Paper Series 18828, Humboldt University Berlin, Department Agricultural Economics.
    11. Musshoff, Oliver & Odening, Martin & Xu, Wei, 2005. "Zur Reduzierung niederschlagsbedingter Produktionsrisiken mit Wetterderivaten," Working Paper Series 18822, Humboldt University Berlin, Department Agricultural Economics.
    12. Lissitsa, Alexej & Odening, Martin, 2001. "Effizienz und totale Faktor-produktivitat in der ukrainischen Landwirtschaft im Transformationsprozess," Working Paper Series 7391, Humboldt University Berlin, Department Agricultural Economics.
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    Cited by:

    1. Dillen, Koen, 2015. "The Russian ban on EU agricultural imports: A bilateral extension of AGLINK-COSIMO," 2015 Conference, August 9-14, 2015, Milan, Italy 211574, International Association of Agricultural Economists.

    More about this item

    Keywords

    bilateral trade; trade preferences; partial equilibrium models; Armington approach; sugar; International Relations/Trade; F11; F15; C69;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other

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