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Estimation of trade elasticities in the presence of trade barriers, multinationals and imperfect competition
Author(s) -
AhmadiEsfahani Fredoun Z.
Publication year - 2009
Publication title -
australian journal of agricultural and resource economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 1364-985X
DOI - 10.1111/j.1467-8489.2009.00449.x
Subject(s) - imperfect competition , economics , presumption , multinational corporation , competitor analysis , imperfect , economic interventionism , competition (biology) , price elasticity of demand , estimation , elasticity (physics) , industrial organization , international economics , microeconomics , econometrics , ecology , linguistics , philosophy , management , finance , politics , political science , law , biology , materials science , composite material
Recent research highlights the role that multinational trading companies may play in impeding price transmission. In markets characterised by imperfect competition, an estimate of the partial elasticity of demand may be of limited practical value if no account is taken of the reaction of competitors. In this paper, we demonstrate the potential for market structure to affect price transmission and trade elasticities, and challenge the presumption that only government intervention can impact upon price transmission, with examples supporting why theory would suggest otherwise.