Markket Integration and Energy Trade Efficiency: An Application of Malmqvist Index to Analyse Multi-Product Trade

Yu Sheng (), Yanrui Wu, Xunpeng Shi and Dandan Zhang
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Dandan Zhang: Peking University

No DP-2014-20, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: As This paper uses the data envelope analysis method to investigate the Malmquist index-based gravity relationship between bilateral energy trade flows and their determinants throughout the world. Using a balance panel data of 40 countries between 1995 and 2008, this paper shows that market integration will increase energy trade by improving trade efficiency between trade partners, though allowing for a flexible substitution between different energy products tends to weaken these effects. This result highlights cross-product substitution and its implications for the aggregate energy trade pattern, providing insights on the importance of prioritising product-specific trade facilitating policies.

Keywords: energy trade efficiency; energy market integration; Malmquist index; energy trade efficiency; energy market integration; Malmquist index (search for similar items in EconPapers)
JEL-codes: O47 Q27 Q47 (search for similar items in EconPapers)
Pages: 35 pages.
Date: 2014
New Economics Papers: this item is included in nep-eff, nep-ene, nep-int and nep-sea
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