Two Ways of Estimating a Transport Model

Torbjorn Jansson

No 18787, Discussion Papers from University of Bonn, Institute for Food and Resource Economics

Abstract: In this article, it is shown how the parameters of a transport model can be estimated in a way that, in contrast to previously used methods, utilizes observations of regional prices as well as of trade costs. The proposed method uses bi-level programming to minimize a weighted least squares' criterion under the restriction that the estimated parameters satisfy the Kuhn-Tucker conditions for an optimal solution of the transport model. We use Monte-Carlo simulations to trace out some properties of the estimator and compare it with a traditional calibration method. The analysis shows that the proposed technique estimates prices as well as trade costs more efficiently.

Keywords: Research; Methods/; Statistical; Methods (search for similar items in EconPapers)
Pages: 22
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ubfred:18787

DOI: 10.22004/ag.econ.18787

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