Premium
Home Bias in Primary Agricultural and Processed Food Trade: Assessing the Effects of National Degree of Uncertainty Aversion
Author(s) -
Ghazalian Pascal L.
Publication year - 2012
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.2011.00329.x
Subject(s) - agriculture , economics , econometrics , estimation , consumption (sociology) , product (mathematics) , loss aversion , agricultural economics , food products , food processing , empirical research , microeconomics , food science , statistics , sociology , biology , ecology , social science , chemistry , geometry , mathematics , management
This study investigates the effects of national degrees of uncertainty aversion (unfamiliarity avoidance) on the magnitude of bias towards domestic products rather than imports. The empirical analysis is implemented for primary agricultural and processed food products, using a panel dataset covering trade between and within OECD countries. Primary agricultural products are often blended and associated with reference prices. Conversely, processed food products exhibit higher levels of product differentiation. The empirical results confirm expectations by emphasizing the magnifying effects of uncertainty aversion on home bias in the case of processed food products but not in the case of primary agricultural products. These magnifying effects are primarily associated with processed food products destined for final household consumption. Other results reveal significant variations between different countries (based on geo‐economic and national income categories). Our results also indicate that home bias and uncertainty aversion effects on home bias have not decreased over time. The empirical results remain robust under different estimation methods.