SUPPLIER SUBSTITUTABILITY BY IMPORTERS: IMPLICATIONS FOR ASSESSING THE 1980 U.S. GRAIN EMBARGO

The 1980 U.S. suspension of grain sales to the Soviet Union illustrates the importance of the choice of conceptual framework for empirical analysis of international trade problems. A spatial equilibrium model of wheat and coarse grains trade assumes perfect substitution among exporting nations' commodities by importers and, thus, precludes the embargo from having a large impact. The imperfect substitutability assumption of an Armington model results in larger consequences from the embargo. For small shocks, the Armington model better captures the rigidities characteristic of international grain markets. The spatial model provides insights on adjustments to large shocks, but rigidities persist in actual markets.


Issue Date:
1988
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/29260
Published in:
Southern Journal of Agricultural Economics, Volume 20, Number 2
Page range:
1-14
Total Pages:
14




 Record created 2017-04-01, last modified 2017-04-04

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)