Modelling hierarchical consumer preferences: an application to global food markets

Much of the recent literature on quantitative analysis of international trade is set in the context of general equilibrium. Accordingly, against a background of continuing liberalization of world markets, and with further reforms anticipated under WTO negotiations, a method of modeling endogenous hi...

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Bibliographic Details
Published in:Applied economics 2003-10, Vol.35 (15), p.1679-1687
Main Authors: Philippidis, George, Hubbard, Lionel J.
Format: Article
Language:English
Subjects:
Applied economics
Consumer behavior
Consumer preferences
Economic impact
Economic models
Economics
Food
Hierarchy
International trade
Market
Preferences
Product differentiation
Statistical analysis
Studies
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Summary:Much of the recent literature on quantitative analysis of international trade is set in the context of general equilibrium. Accordingly, against a background of continuing liberalization of world markets, and with further reforms anticipated under WTO negotiations, a method of modeling endogenous hierarchical consumer preferences is reported, based on region of origin, within a computable general equilibrium framework. This extends the treatment of endogenous product differentiation in CGE models and adds an extra dimension to the exogenous, region-of-origin approach maintained under the commonly adopted Armington assumption. The first part of the paper reports technical implementation of patriotic preference in imperfectly competitive food markets. This is then followed by an empirical illustration in which the impact on trade flows is isolated.
ISSN:0003-6846
1466-4283
DOI:10.1080/0003684032000128454