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

  • Femenia, Fabienne
  • Gohin, Alexandre

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.

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File URL: http://purl.umn.edu/7211
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Paper provided by TRADEAG - Agricultural Trade Agreements in its series Working Papers with number 7211.

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Date of creation: 2007
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Handle: RePEc:ags:tragwp:7211
Contact details of provider: Web page: http://tradeag.vitamib.com/

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