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The Production Theory Approach to Import Demand Analysis: A Comparison of the Rotterdam Model and the Differential Production Approach

Published online by Cambridge University Press:  28 April 2015

Andrew A. Washington  and
Richard L. Kilmer
Andrew A. Washington
Affiliation:
Department of Economics, Southern University, Baton Rouge LA
Richard L. Kilmer
Affiliation:
Food and Resource Economics Department, University of Florida, Gainesville, FL, and a member of the International Agricultural Trade and Policy Center (IATPC) at the University of Florida
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Abstract

Results indicate that, when comparing the unconditional derived-demand elasticities to the unconditional consumer demand elasticities, significant differences emerge due to the differences in the first-stage estimation procedure between the differential production approach and the Rotterdam model. In comparing the consumer demand price/cross-price elasticities to the derived-demand price/cross-price elasticities, it is clear that use of the Rotterdam model when a production approach should be used can lead to overestimation, underestimation, and incorrect signs in deriving unconditional price effects.

Keywords

dairydemandimportsinternationalproductionRotterdamtradeD12D24F10F14Q17
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 34 , Issue 3 , December 2002 , pp. 431 - 443
Copyright
Copyright © Southern Agricultural Economics Association 2002

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