Armington elasticities and tariff regime: An application to European Union rice imports
Most of the European Union’s (EU) import sources for rice are in developing countries and the least-developed countries (LDCs). The EU has moreover 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 – First: Does the inclusion of import tariffs in the specification lead to different estimated Armington elasticities? Second: When a discriminating tariff is introduced, what happens to the market share of large rice exporters to the EU, especially to the market share of poor countries? Consequently, 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. Then, we estimate the Armington model, with and without the inclusion of a tariff, and we compare the elasticities. Lastly, we model five scenarios with different discriminating import tariff rates to calculate the changes in the market access of large rice exporters to the EU. Our empirical results show that it is worthwhile to consider non-homothetic preferences and import tariffs. When the model is estimated, ignoring the import tariffs and the non-homothetic parameter, results may be 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.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.rennes.inra.fr/smart_eng/Working-Papers-SMART-LERECO|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ito, Shoichi & Chen, Dean T. & Peterson, E. Wesley F., 1990. "Modeling international trade flows and market shares for agricultural commodities: a modified Armington procedure for rice," Agricultural Economics, Blackwell, vol. 4(3-4), pages 315-333, December.
- Gallaway, Michael P. & McDaniel, Christine A. & Rivera, Sandra A., 2003. "Short-run and long-run industry-level estimates of U.S. Armington elasticities," The North American Journal of Economics and Finance, Elsevier, vol. 14(1), pages 49-68, March.
- Mika Saito, 2004.
"Armington Elasticities in Intermediate Inputs Trade: A Problem in Using Multilateral Trade Data,"
IMF Working Papers
04/22, International Monetary Fund.
- Mika Saito, 2004. "Armington elasticities in intermediate inputs trade: a problem in using multilateral trade data," Canadian Journal of Economics, Canadian Economics Association, vol. 37(4), pages 1097-1117, November.
- Yves Surry & Nadine Herrard & Yves Le Roux, 2003. "Modelling trade in processed food products: an econometric investigation for France," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(4), pages 571-571, December.
- Kapuscinski, Cezary A. & Warr, Peter G., 1999.
"Estimation of Armington elasticities: an application to the Philippines,"
Elsevier, vol. 16(2), pages 257-278, April.
- Cezary A Kapuscinski & Peter G Warr, 1996. "Estimation of Armington Elasticities: An Application to the Philippines," Departmental Working Papers 1996-08, The Australian National University, Arndt-Corden Department of Economics.
- Cezary A. Kapuscinski & Prof Peter G. Warr, 1996. "Estimation of Armington Elasticities: An Application to the Philippines," Trade and Development 96/8, Australian National University, Department of Economics.
- Yves Surry & Nadine Herrard, 2002. "Modelling trade in processed food products: an econometric investigation for France," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(1), pages 1-28, March.
- Ito, Shoichi & Chen, Dean T. & Peterson, E. Welsey F., 1990. "Modeling international trade flows and market shares for agricultural commodities: a modified Armington procedure for rice," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 4(3-4), December.
- Yang, Seung-Ryong & Koo, Won W., 1993. "A generalized armington trade model: Respecification," Agricultural Economics, Blackwell, vol. 9(4), pages 347-356, December.
- repec:cup:cbooks:9780521874434 is not listed on IDEAS
- Yang, Seung-Ryong & Koo, Won W,, 1993. "A generalized Armington trade model: Respecification," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 9(4), December.
When requesting a correction, please mention this item's handle: RePEc:rae:wpaper:200804. 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: (Anne Chauvel)
If references are entirely missing, you can add them using this form.