Alex Gohin is with INRA and Agrocampus Rennes, UMR1302, F-35000, Rennes, France, and also with CEPII, Paris. E-mail: firstname.lastname@example.org for correspondence. Fabienne Féménia is also with INRA and Agrocampus Rennes. The authors acknowledge financial support by the Agricultural Trade Agreements (TRADEAG) project, funded by the European Commission, DG Research (Specific Targeted Research Project Contract no. 513666). The authors thank A. Carpentier and C. Gaigné for their comments on earlier versions, as well as the two anonymous referees and the editor for their very thorough review and their constructive comments. Otherwise, the authors are solely responsible for the contents of this paper.
Estimating Price Elasticities of Food Trade Functions: How Relevant is the CES-based Gravity Approach?
Article first published online: 24 FEB 2009
© 2009 The Authors. Journal compilation © 2009 The Agricultural Economics Society
Journal of Agricultural Economics
Volume 60, Issue 2, pages 253–272, June 2009
How to Cite
Gohin, A. and Féménia, F. (2009), Estimating Price Elasticities of Food Trade Functions: How Relevant is the CES-based Gravity Approach?. Journal of Agricultural Economics, 60: 253–272. doi: 10.1111/j.1477-9552.2009.00199.x
- Issue published online: 27 APR 2009
- Article first published online: 24 FEB 2009
- (Original submitted June 2008, accepted September 2008.)
- Censored demand system;
- generalised maximum entropy;
The main objective of this article is to examine econometric estimates of price elasticities of food trade functions. We investigate the relevance of the prominent gravity approach. This approach is based on the assumptions of symmetric, monotone, homothetic, Constant Elasticity of Substitution (CES) preferences. We test all these assumptions using intra-European trade in cheese. In general, the assumptions made on preferences by the gravity approach are not supported by our dataset. The bias induced in the estimated price elasticities is ambiguous.