Gravity estimations to correct the 'small shares stay small' bias in economic models

The simulation of liberalization trade scenarios in economic models normally understate the export growth for countries with small initial trade shares but which nevertheless could be competitive under a new tariff regime. This downward bias is known as the ´small share stay small´ and it is inherent to the constant elasticity of substitution in the Armington demand specification. In this report, we show how the gravity equation can provide econometric estimates of the tariffs restrictiveness and trade shares after tariff liberalization and how these can be input into a General Equilibrium (CGE) model to remedy said bias. The fusion approach between gravity and CGE that we follow closely in this report was proposed by Kuiper and van Tongeren (2006) and further developed by Philippidis et al.(2014). As an empirical illustration, the method is applied to agro-food trade between EU and Mercosur where a pervasiveness of 'small-share' examples exists.Publishe

Labels for a local food speciality product: the case of saffron

We examine the potential demand for a local food speciality product, saffron, with alternative labels, using a choice experiment. The paper contributes to the literature on credence attributes, by examining Willingness to Pay (WTP) for the local, organic and PDO (Protected Designation of Origin), their differences across experimental conditions (hypothetical and non-hypothetical), and by identifying the effects of personal characteristics, in terms of socio-demographics and level of product involvement on the differences in WTP. We find that the local saffron speciality has an important appeal that could be better reinforced with the PDO rather than the organic labelling, and that consumers show a consistent pattern of preferences across experimental environments. WTP tends to be higher in the hypothetical setting and, in particular, consumers with relatively more knowledge and deeper roots in the territory tend to exhibit a larger WTP premium for local origin and its certification. These results may help producers improve their marketing of agri-food products with a high gastronomic value and differentiation potential, while they warn about an overstatement of WTP for socially desirable characteristics, such as organic labelling, which is also relevant for policymakers

Capturing zero trade values in gravity equations of trade: A disaggregated sectoral analysis

European Association of Agricultural Economist

Gravity estimation of non tariff measures (NTMs) on EU-USA agri-food trade: Implications for further analysis

Under development: This year marks the formal opening of trade negotiations between the world's two largest trading partners – the European Union (EU) and the United States of America (USA). It is expected that the transatlantic partnership negotiations will face significant obstacles on both sides, which in turn places the burden on economists to provide plausible impact assessments to inform policy makers. Unfortunately, modelling databases whilst rich with detailed disaggregated representations of tariff barriers, still underperform in the case of non- tariff measure counterparts. Indeed, unlike conventional tariff measures, NTMs do not have a transparent price effect which can be readily inserted into an economic model. Over the last decade, the usage of gravity models has received recognition as one such tool for understanding the 'part-worth' of NTM measures on trade restrictiveness. This paper also employs a gravity approach, whilst the explorative nature of the research restricts the current focus to four agro-food sectors. Preliminary results suggest that NTMs impose a relatively equivalent ad valorem equivalent (AVE) trade cost on trade flows of cattle meat and processed rice in both directions. In the case of cattle meat, this appears to be consistent with the retaliatory nature of NTM instruments employed by US importers on EU bans. In beverages and tobacco and dairy products, however, the AVE of the NTM is higher on EU imports of US goods. In the case of beverages and tobacco, this finding appears to be consistent with the qualitative survey work conducted in ECORYS (2009), whilst the result for US dairy imports from the EU remains at first sight, counterintuitive and deserving of further research.non-tariff measuresgravity equationresidual approachagri-foodPublishe

El uso actual y potencial del azafrán entre los consumidores aragoneses

Unpublishe

Developing marketing strategies for Jiloca saffron: a price hedonic model

The paper examines the retail price structure of saffron currently marketed in the Spanish market, with special emphasis on the assessment of the region of origin and its certification as tools of differentiation. The motivation lies on the search for effective marketing tools for Jiloca saffron (Aragón) that in turn may contribute to preserve this traditional agricultural sector threatened by progressive abandonment. An hedonic price regression is estimated for this purpose, where the functional form is empirically determined. The prices and product characteristics have been collected from labels of saffron references either found on the shelves of representative retail shops in the main city of Aragon (Zaragoza) or on the internet shopping services that the main Spanish distribution chains offer. Results show that higher prices are attached for saffron distributed at supermarkets and Gourmet shops, marketed in threads, packaged in glass, and which carries a brand owned by a processor specialized in the processing and marketing of saffron. Currently, the recognition of Jiloca origin does not carry a premium, contrary to what happens to La Mancha, whilst the Protected Designation of Origin reinforces the economic value of La Mancha origin.El artículo examina la contribución de una serie de características en la formación de precios del azafrán que actualmente se comercializa en España, con especial énfasis en el origen y su certificación como elementos de diferenciación y generación de valor añadido. La motivación subyacente a esta investigación es la búsqueda de herramientas de marketing que permitan mejorar la comercialización del azafrán del Valle del Jiloca en Aragón, contribuyendo con ello a frenar el abandono de este cultivo tradicional. Con este fin, se ha estimado una regresión de precios hedónicos, donde la forma funcional se ha determinado empíricamente. Los precios y características del producto se han recopilado a partir de las referencias disponibles en todas las grandes cadenas de distribución alimentaria (y tiendas Gourmet) instaladas en el mercado urbano más próximo a la zona de producción (Zaragoza), así como a través del servicio de venta on-line de las principales cadenas de distribución en España. Los mayores precios implícitos corresponden a las referencias comercializadas a través de supermercados y tiendas Gourmet, en hebras, en frascos de cristal, y con marcas de fabricantes especializados en esta especia. Actualmente, el reconocimiento explícito del origen Jiloca no conlleva un sobreprecio, al contrario de lo que ocurre con el azafrán de La Mancha. En este último caso, además, la Denominación de Origen refuerza significativamente el valor económico aportado por el origen

Developing marketing strategies for Jiloca saffron: a price hedonic model

Unpublishe

El uso actual y potencial del azafrán entre los consumidores aragoneses

Proyecto INIA PET 2007-14-C05-0