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I introduce a novel general equilibrium framework for agricultural trade policy analysis with heterogeneous producers in which agro-ecological characteristics inuence patterns of specialization within the sector and trade costs are product-specific. This induces substantial variation in market share elasticities with respect to trade costs, with the largest magnitude elasticities between countries most likely to compete head-to-head in the same products. The model is thus able to generate more nuanced predictions for how bilateral agricultural trade and production patterns shift in response to changes in policy than existing models. I draw on techniques pioneered in the discrete choice literature to estimate parameters that describe the distribution of productivity and trade costs across products. This approach has the considerable advantage of allowing me to solve a product-level conceptual model with little data beyond what is used in a standard gravity model. This framework promises to allow researchers to make more informed predictions for how global agricultural trade and production patterns shift in response to policy change.

Keywords: Agricultural Trade ; Gravity ; Trade Costs ; Discrete Choice ; Productivity ; Comparative Advantage

Subject(s): Agricultural and Food Policy

International Relations/Trade

Research Methods/ Statistical Methods

Issue Date: 2014

Publication Type: Conference Paper/ Presentation

PURL Identifier:

Total Pages: 55

Series Statement: Paper


Record appears in: Agricultural and Applied Economics Association (AAEA) > 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota

Autor: Heerman, Kari E.R.


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