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

Abstract

Journal articleISI; IFPRI3EPTDP

Understanding the Stickiness of Commodity Supply Chains Is Key to Improving Their Sustainability

“…Agricultural economics studies show that in global markets with free trade, agricultural products from one place are not fully substitutable with products from another place, even after accounting for price differences. [31][32][33] Standard econometric studies and economic models use empirically calibrated ''Armington trade substitution elasticities.'' 30 These studies account for the differentiation of products based on production place, and for the fact that price shocks occurring in one country do not spread homogenously in the global market, but predominantly affect the key trade partners of that country.…”

Explaining the stickiness of supply chain relations in the Brazilian soybean trade

“…The scholarship that follows from this assumption finds that geographic distance ( Disdier and Head, 2008 ) plays a significant role in bilateral trade persistence. It finds that trade supply chain stickiness persistence is mostly a result of transport infrastructure as a distance-shortening factor ( Agcaoili-Sombilla and Rosegrant, 1994 , Brun et al, 2005 ), but is also influenced by country-of-origin bias ( Kawashima and Puspito Sari, 2010 ), market demand, importer and exporter preferences ( Heron et al, 2018 ), and biophysical conditions ( Meyfroidt et al, 2013 , Roux et al, 2020 ). The country-of-origin bias and preference aspects specifically give rise to the idea that even commodities can still be differentiated based on “quality” differences that are not always materially visible.…”