Traditional computable general equilibrium (CGE) models based on the Armington assumption fail to capture the extensive margin of trade, and thereby underestimate the trade and welfare effects of trade opening. To address this problem, this paper introduces the Melitz (2003) theoretical framework with firm heterogeneity and fixed exporting costs into a global CGE model. Some illustrative simula...

Foreign-domestic substitution elasticities (the so-called ‘Armington elasticities’) determine the degree of competitiveness in demand between similar products produced different countries and are key parameters a variety numerical models international trade. Armington part explanation large increases market shares foreign relative to locally ones Australia, for example. The existing literature ...

The Dissertation at hand investigates the effects of different policy options on the world sugar market. A Spatial Price Equilibrium Model as suggested by Takayama and Judge is established. This model type has one considerable advantage over previously applied types which is its ability to combine the assumption of homogeneous goods regardless of origin (as opposed to Armington-based models) wi...

market volatility remains one of the most important research fields in agricultural economics.interestingly, price transmission mechanism seems to be symmetric in sectors that are likely to be of high political power.this paper analyzes the price transmission effects from international markets to domestic markets for corn in iran. for this purpose, we estimate the elasticity of substitution bet...