Import Demand with Product Differentiation: Disaggregated Estimation of Italian Sectoral Elasticities
This paper focuses on the estimation of sectoral import demand for Italy with European Union Countries, Japan, Canada and the United States. A strong evidence of two-way flows and product differentiation is an accepted regularity of the international trade. Given that, we have tried to include considerations of differentiation in the empirical analysis. Starting from the very disaggregated bilateral trade data (5 digit Sitc Rev. 3) we have classified every and each flow as homogeneous, quality differentiated and non-quality differentiated, using the methodologies developed by Abd-El-Rahman (1986) and Freudenberg and Müller (1992). Then we have included this classification in our econometric estimates of the sectoral import demands. That should increase precision of the estimate, because allow to divide homogeneous from not homogeneous goods in the estimation procedures. Our results suggest a dynamic reaction of italian imports in many sectors, pointing to possible competitive problems for the firms and external balance constraint for the country.
This paper estimates sectoral demand functions for Italian imports from European Union countries, Japan, Canada and United States. Evidence of two-way flows and product differentiation is an accepted regularity of international trade. We have tried to include considerations of differentiation in the analysis. Starting from very disaggregated bilateral trade data (5 digit Sitc Rev. 3) we have classified each flow as homogeneous, quality differentiated or non-quality differentiated. Then we have used this classification in the estimate of sectoral import functions. That should increase precision, because avoids pooling homogeneous and differentiated goods in estimation. Our results suggest a very dynamic reaction of Italian imports in many sectors, pointing to possible competitive problems for firms and trade balance constraint for the country.
Sectoral import demand; Quality and horizontal differentiation; Italian trade; Sectoral price and income elasticity
In order to set up a list of libraries that you have access to,
you must first login
or sign up.
Then set up a personal list of libraries from your profile page by
clicking on your user name at the top right of any screen.