The impact of EU export subsidy reductions on U.S. dairy exports
01 Oct 2008-Agribusiness (Wiley Subscription Services, Inc., A Wiley Company)-Vol. 24, Iss: 4, pp 557-574
TL;DR: In this paper, the impact of European Union (EU) export subsidy reductions on the U.S. dairy trade has been investigated and the authors assume reductions of 36% similar to the 1995 World Trade Organization agreement.
Abstract: In this article, we consider the impact of European Union (EU) export subsidy reductions on the U.S. dairy trade. We assume reductions of 36% similar to the 1995 World Trade Organization agreement. The price substitutability between U.S. and EU dairy products is estimated using a Rotterdam-type production model. Past analyses have suggested that EU export subsidy reductions will increase U.S. dairy exports because the removal of EU subsidies will raise EU export dairy prices, rendering U.S. dairy products more competitive on world markets. This is partially true for nonfat dry milk, where our projections indicate an increase of 4.6% in U.S. exports. U.S. cheese, butter, and whey exports, on the other hand, rise by only 0.2, 0.1, and 0.2%, respectively. The main reason for the relatively modest gains is that the U.S. and EU dairy products are independent, not substitutes, for one another in a majority of the countries studied. [JEL classifications: Q17, Q18, F53] © 2008 Wiley Periodicals, Inc.
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01 Jan 2000TL;DR: In this paper, the authors present the differential approach to the theory of the firm and present the methodology of how it can be applied to import demand analysis, and compare and contrast the use of the differential production approach with the Rotterdam model.
Abstract: The primary objective of this paper is to present the differential approach to the theory of the firm and to present the methodology of how it can be applied to import demand analysis. Furthermore, this paper compares and contrasts the use of the differential production approach with the Rotterdam model.
38 citations
TL;DR: In this paper, a differential production approach is used to estimate China's demand for imported soybeans and soybean oil from both country-of-origin and product-form perspectives, and empirical demand estimates are then used to derive conditional and unconditional elasticities of demand for each exporting country with respect to changes in domestic and import prices, and the price of resources used in soybean meal and oil production.
Abstract: Purpose – The purpose of this paper is to estimate China's demand for imported soybeans and soybean oil from both country‐of‐origin and product form perspectives.Design/methodology/approach – A differential production approach is used to estimate China's demand for imported soybeans and soybean oil. The empirical demand estimates are then used to derive conditional and unconditional elasticities of demand for each exporting country with respect to changes in domestic and import prices, and the price of resources used in soybean meal and oil production.Findings – Results indicate that both country‐of‐origin and product form competition exist in the Chinese market. Estimation results indicate that China's soybean meal prices significantly impacted its soybean and soybean oil imports. Seasonality is detected in China's soybean imports, but not in soybean oil imports.Practical implications – The findings suggest that, in addition to country‐of‐origin competition, product form competition should be considered ...
19 citations
TL;DR: In this article, the authors present a theoretical framework and derive an empirical model that relates import price risk to the allocation of an import across exporting sources (source diversification) using a differential approach to expected utility theory and firm demand.
Abstract: In this article, I present a theoretical framework and derive an empirical model that relates import price risk to the allocation of an import across exporting sources (source diversification). A differential approach to expected utility theory and firm demand is used to derive a model comparable to more popular demand systems such as the Rotterdam and AIDS models. The model is used in estimating carnation demand in the United Kingdom. Results show that while total carnation imports, expected prices and seasonality are important determinants of import demand by source, there is significant information loss when price risk is not considered. Copyright 2012, Oxford University Press.
15 citations
Cites background from "The impact of EU export subsidy red..."
...…assumed for commodities like wheat (Alston et al. 1990; Koo, Mao, and Sakurai 2001), meats (Yang and Koo 1994; Mutondo and Henneberry 2007), whey (Washington and Kilmer 2002), butter (Muhammad and Kilmer 2008), cotton (Arnade, Pick, and Vasavada 1994), and apples (Seale, Sparks, and Buxton 1992)....
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TL;DR: In this article, the impacts of implementing the Korea-U.S. Free Trade Agreement (KORUS FTA) on South Korea's dairy trade are assessed based on empirical estimates of short-run and long-run source-based import demand parameters for three major imported dairy products.
Abstract: The impacts of implementing the Korea-U.S. Free Trade Agreement (KORUS FTA) on South Korea's dairy trade are assessed in this study based on empirical estimates of short-run and long-run source-based import demand parameters for three major imported dairy products. These estimates were derived using the Central Bureau of Statistics (CBS) demand system model. The impacts of the tariff reductions associated with the KORUS FTA were calculated. The results suggest that the KORUS FTA will open South Korean dairy product markets primarily by reducing import prices of international suppliers’ products. The altered import relationships among those suppliers raises overall dairy product imports into South Korea. [EconLit Classifications: F14, Q17].
5 citations
TL;DR: In this paper, the authors analyse EU soybean and maize imports using a demand system borrowed from the differential approach to firm theory, along with providing own-price and cross-price elasticities for these two products, and test whether source-specific characteristics exert any influence on complementarity and substitution patterns between international exporters.
Abstract: In this work, we analyse EU soybean and maize imports using a demand system borrowed from the differential approach to firm theory. Alongside providing own-price and cross-price (i. e. cross-country) elasticities for these two products, we test whether source-specific characteristics exert any influence on complementarity and substitution patterns between international exporters. Specifically, we look at country differences stemming from supply chain efficiency and the asynchronous approval of Genetically Modified (GM) varieties. We do so by introducing two measurements for such features into a linear demand model specified by Laitinen and Theil (1978). Estimation results suggest that the EU import structure is not affected by differences in supply chain efficiency between overseas suppliers while, depending on the product, asynchronous approval does seem to have an influence. We find that imports of maize are more sensitive than those of soybeans to differences in approval statuses between international exporters and the EU. Since soybean availability is a limiting factor for the EU feed industry, avoiding stock shortages may be a priority for European importers, hence the weaker effect of asynchronous approval. On the other hand, the substantial EU self-sufficiency for maize places more emphasis on product characteristics and prices.
2 citations
Cites methods from "The impact of EU export subsidy red..."
...Following Washington and Kilmer (2002), Christou et al. (2005), and Muhammad and Kilmer (2008), model (1) describes the input allocation decision of country 𝑖 as a function of other countries’ relative prices and the input Divisia index....
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...We compute import prices by dividing the import value of soybeans or maize from county 𝑗 by the corresponding quantity (these prices are called ‘unit values’ and are extensively used in trade analysis: see for example Muhammad and Kilmer 2008; Washington and Kilmer 2002)....
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References
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01 Mar 1969
TL;DR: In this article, Solow et al. present an approach for the analysis of the variation of a flux commercial particulier entre pays in the context of recherche.
Abstract: Cette A©tude offre un appui thA©orique A certaines pratiques de recherche selon lesquelles la variation d'un flux commercial particulier entre pays est considA©rA©e comme la rA©sultante de deux A©lA©ments: la modification qui se produirait si le pays fournisseur donnA© devait conserver sa part du marchA©, et l'A©cart entre les ventes effectives et celles qui s'effectueraient si sa part du marchA© demeurait constante. Ces pratiques comprennent la mA©thode de prA©vision des A©changes dans laquelle: 1) les prA©visions de l'expansion des divers marchA©s, combinA©es avec une matrice relative A la pA©riode courante, fournissent une matrice pour la pA©riode future A©tablie sur la base de parts du marchA© constantes; 2) cette matrice A©tablie sur la base de parts du marchA© constantes est modifiA©e pour tenir compte de facteurs censA©s engendrer des gains ou des pertes de parts. Dans la prA©sente A©tude, on fait valoir que l'analyse des modifications des flux commerciaux en deux A©lA©ments reprA©sentant, l'un des parts du marchA© constantes et l'autre des parts du marchA© modifiA©es, n'intA©resse pas seulement la comptabilitA©, mais qu'elle peut certainement Aatre rattachA©e purement et simplement A la thA©orie traditionnelle du comportement des consommateurs. On part de l'hypothA¨se que les produits sont diffA©renciA©s non seulement d'aprA¨s leur espA¨ce mais A©galement d'aprA¨s leur origine. Autrement dit, on suppose que des produits originaires de diffA©rents pays et offerts concurrement sur le mAame marchA© ne sont pas susceptibles de se remplacer parfaitement. Il est dA©montrA© ensuite qu'une spA©cialisation poussA©e et suffisamment rA©aliste de la fonction de bien-Aatre de Hicks permet d'obtenir des A©quations assez simples de la demande englobant les deux A©lA©ments mentionnA©s plus haut. Cette spA©cialisation se fonde sur l'hypothA¨se "d' indA©pendance" (telle qu'elle a A©tA© formulA©e par R. M. Solow, R. H. Strotz et d'autres) ainsi que sur celle selon laquelle les A©lasticitA©s du remplacement entre produits offerts concurremment sur un marchA© quelconque donnA© sont constantes et A©gales. /// Este estudio ofrece un apoyo teA³rico a ciertas prAicticas de investigaciA³n segAon las cuales a la variaciA³n en una corriente determinada de intercambio entre paAses se la considera como la suma de dos componentes: la variaciA³n que ocurrirAa si un paAs vendedor dado mantuviera su participaciA³n en el mercado, y la desviaciA³n de las ventas efectivas con respecto a las ventas que tendrAan lugar de permanecer constantes las participaciones. Dichas prAicticas incluyen la previsiA³n de los intercambios, en la cual 1) los pronA³sticos del crecimiento en diversos mercados, junto con la matriz de un perAodo de base, resultan en una matriz de participaciones constantes para el perAodo futuro, y 2) se modifica esta matriz de participaciones constantes para tener en cuenta a los factores que se espere que produzcan pA©rdidas o ganancias en las participaciones. En este trabajo se mantiene que el anAilisis de las variaciones en las corrientes de intercambio comercial, separando el componente de participaciones constantes y el de ajuste de las participaciones, es mAis que una simple cuestiA³n de contabilidad, y en realidad se le puede ligar sencilla y rigurosamente a la teorAa tradicional del comportamiento del consumidor. El punto de partida es el supuesto de que se establecen distinciones no solamente segAon la clase de los productos sino tambiA©n segAon el lugar de producciA³n de los mismos. Es decir, se supone que los productos de distintos paAses que compiten en el mismo mercado son sustitutos imperfectos. Se demuestra luego que una especializaciA³n eficaz y bastante realista de la funciA³n hicksiana del bienestar lleva a relaciones de demanda muy sencillas en las que se incluyen los componentes de la participaciA³n constante y del ajuste de las participaciones. Esta especializaciA³n exige el supuesto de "independencia" (que formularan R. M. Solow, R. H. Strotz, et al.) y el supuesto de que las elasticidades de sustituciA³n entre los productos que compiten en un mercado determinado son constantes e iguales.
4,424 citations
572 citations
TL;DR: This article used a varying coefficients model to estimate Armington elasticities between U.S. domestic and foreign goods across over one hundred industrial sectors from 1980 to 1988 and examined the role of product, industry, political, and home bias factors as determinants.
Abstract: 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.
182 citations
TL;DR: In this article, the authors used out-of-sample forecasting of annual U.S. per capita food consumption, applying data from 1923 to 1992, is used as a basis for model selection among the absolute price Rotterdam model, a first-differenced linear approximate almost ideal demand system (FDLA/ALIDS) model, and a double-log demand system.
Abstract: Out-of-sample forecasting of annual U.S. per capita food consumption, applying data from 1923 to 1992, is used as a basis for model selection among the absolute price Rotterdam model, a first-differenced linear approximate almost ideal demand system (FDLA/ALIDS) model, and a first-differenced double-log demand system. Conditional-on-price consumption forecasts derived from elasticities are determined to be superior to direct statistical model forecasts. Models with consumer theory imposed through parametric restrictions provide better forecasts than models with little theory-imposition. For these data, a double-log demand system is a superior forecaster to the Rotterdam model, which is superior to the FDLA/ALIDS model.
108 citations
TL;DR: In this article, the authors present empirical results of estimating a demand system with Canadian data which suggest that maximizing the full likelihood function can yield very different and more reasonable estimates than maximizing the conventional one.
Abstract: Maximum likelihood estimation of equation systems with first-order autocorrelation should, in principle, take into account the first observation and associated stationarity condition. In the general case, this leads to computational difficulties compared with conventional procedures, which perhaps explains the failure of the latter to incorporate the initial observation. However, in a special case where the autoregressive process has only one parameter, which is widely used for single equation systems such as demand systems, taking the first observation into account is no more difficult than ignoring it. The paper presents empirical results of estimating a demand system with Canadian data which suggest that maximizing the full likelihood function can yield very different and more reasonable estimates than maximizing the conventional one.(This abstract was borrowed from another version of this item.)
69 citations