Estimating Price Elasticities of Food Trade Functions: How Relevant is the CES‐based Gravity Approach?

Alexandre Gohin and Fabienne Femenia

Journal of Agricultural Economics, 2009, vol. 60, issue 2, 253-272

Abstract: 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.

Date: 2009
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https://doi.org/10.1111/j.1477-9552.2009.00199.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jageco:v:60:y:2009:i:2:p:253-272

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