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Trade Costs and the Gains from Trade in Crop Agriculture

Jeffrey Reimer and Man Li

American Journal of Agricultural Economics, 2010, vol. 92, issue 4, 1024-1039

Abstract: We develop a simulation model of world crop markets that is based upon Ricardian comparative advantage. We apply the model to twenty-three countries and provide measures of the degree of globalization in this sector, the gains from trade, and the elasticity of trade volumes to trade costs. The distribution of the gains from trade across countries is uneven due to important differences in openness to imports, productivity, and other factors, some of which appear to be related to a country's level of development. Distance limits the extent by which changes in one country are transmitted to others. Copyright 2010, Oxford University Press.

Date: 2010
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Handle: RePEc:oup:ajagec:v:92:y:2010:i:4:p:1024-1039