World Demand Elasticities of Argentine Dairy Products and their Competitiveness

DOI:  https://doi.org/10.12804/revistas.urosario.edu.co/economia/a.6457

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Published: Feb 13, 2018
Issue: Vol. 20 No. 2 (2017): julio-diciembre
Section Articles


Keywords: Armington model constant elasticity of substitution price-elasticity fixedeffects random-effects.

Main Article Content

Authors

Rodrigo García Arancibia
Instituto de Economía Aplicada Litoral (iecal-fce-unl) & conicet, Santa Fe, Argentina.

Abstract

The aim of this paper is to determine world demand for the main dairy products exported by Argentina vis-à-vis its competitors. Based on the Armington approach, a theoretical model is presented to study the import demand of major importing countries of Argentine milk powder and cheeses as a function of its relative price, extending the traditional homothetic ces specification to a non-homothetic version. For empirical implementation, an econometric specification for panel data is proposed. The model is estimated using filtered fixed effects and random effects models, with an ar(1) structure for idiosyncratic errors. Within the parameters of demand estimates, the elasticity of substitution is estimated as are own-price and cross-price elasticities. Such measures provide valuable information for understanding the response of the global demand to different policy measures or exogenous shocks that could alter the relative Argentine prices paid by importers, and therefore analyze the competitive position of Argentina in some international markets.

How to Cite
García Arancibia, R. (2018). World Demand Elasticities of Argentine Dairy Products and their Competitiveness. Revista Economía Del Rosario, 20(2), 275–306. https://doi.org/10.12804/revistas.urosario.edu.co/economia/a.6457
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