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The Combination of Gravity and Welfare Approaches for Evaluating Nontariff Measures
Author(s) -
Disdier Anne-Célia,
Marette Stéphan
Publication year - 2010
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aaq026
Subject(s) - welfare , economics , gravity equation , european union , gravity model of trade , general equilibrium theory , partial equilibrium , econometrics , estimation , international economics , microeconomics , bilateral trade , geography , management , archaeology , china , market economy
Abstract This article explores the link between gravity and welfare frameworks for measuring the impact of nontariff measures. First, an analytical approach suggests how to combine a gravity equation with a partial equilibrium model to determine the welfare impact of nontariff measures. Second, an empirical application focuses on the effects of a standard that caps antibiotic residues in crustaceans in the United States, the European Union, Canada, and Japan. While the econometric estimation of the gravity equation reports a negative impact on imports, welfare evaluations show that in most cases, a stricter standard leads to an increase in both domestic and international welfare.