China's agricultural trade cost elasticity

Estimates from using translog gravity model

Dan Meng, Koshi Maeda, Xuejun Wang

Research output: Contribution to journalArticle

Abstract

The elasticity of trade flows with respect to trade costs involve important implications that quantify welfare gains from trade and predict the effects of trade policy on trade flows. The major purposes of this study are to estimate China's agricultural trade-cost elasticity and to analyze its heterogeneity across different types of trading partners. A micro-founded method based on the translog gravity model developed by Novy (2013) is applied to measure the trade-cost elasticity of China's agricultural products using a panel dataset of its major trading partners. First, the estimation results show that there was an obviously negative relationship between the import share of trading partners with respect to China's agricultural products and its corresponding trade-cost elasticity. Specifically, the higher the import share of trading partners with respect to China's agricultural products, the lower the weighted average trade-cost elasticity. Second, the weighted average trade-cost elasticity of aggregate agriculture experienced a rapid downward trend from 1996 to 2016. The trade-cost elasticity fell from 13.68 in 1996 to 6.54 in 2016. Finally, the trade-cost elasticity measure presents significant heterogeneity across various types of trading partners.

Original languageEnglish
Pages (from-to)177-184
Number of pages8
JournalJournal of the Faculty of Agriculture, Kyushu University
Volume63
Issue number1
Publication statusPublished - Feb 1 2018

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Elasticity
Gravitation
elasticity (mechanics)
gravity
China
Costs and Cost Analysis
agricultural products
imports
Agriculture
trade policy
agriculture

All Science Journal Classification (ASJC) codes

  • Biotechnology
  • Agronomy and Crop Science

Cite this

China's agricultural trade cost elasticity : Estimates from using translog gravity model. / Meng, Dan; Maeda, Koshi; Wang, Xuejun.

In: Journal of the Faculty of Agriculture, Kyushu University, Vol. 63, No. 1, 01.02.2018, p. 177-184.

Research output: Contribution to journalArticle

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