International trade in a differentiated good: Trade elasticities in the world rice market

Abstract

In many previous rice trade models, the commodity has been regarded as a homogeneous product. However, homogeneity is not an appropriate assumption, given the various types of rice that are traded and consumed. Parameters estimated from these models, therefore, do not reflect the real world market for rice and, hence, may mislead decision makers who use the results for policy evaluation purposes. This study uses an Armington approach to model the world rice trade as a differential good market and to derive trade elasticity parameters.

Spatial Correlation, Trade, and Inequality: Evidence from the Global Climate

“…FAO data report quantities of wheat produced, but trade data distinguish durum and non-durum wheat. Trade data distinguish four types of rice, but the International Rice Genebank holds more than 125,000 rice varieties, which are differentiated by quality, appearance, and taste (Agcaoili-Sombilla and Rosegrant, 1994). Quantitative trade models make common predictions about trade flows while making different assumptions about the set of goods in the utility function.…”