Using the Trans-log Expenditure Function to Endogenize New Market Access in Partial Equilibrium Models

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dc.contributor.authorPeterson, Everett B.en
dc.date.accessioned2019-07-11T16:43:15Zen
dc.date.available2019-07-11T16:43:15Zen
dc.date.issued2011-08en
dc.description.abstractWhile Constant Elasticity of Substitution (CES) utility functions are a common choice in empirical partial and general equilibrium models because they are parsimonious in the number of model parameters, they are not well suited for cases where the consumption of a given could equal zero. This is because the uncompensated demand functions derived from a CES utility function will equal zero only if the price of that good is equal to infinity or the shift parameter in the utility function for that good is equal to zero (e.g., consumers do not wish to consume that good). In order to allow for the possibility of zero consumption, a preference structure must allow for the underlying “demand curve” to intersect the price axis. This will be important when assessing the effect of new market access for a particular good. In that case, initial consumption is equal to zero because of the existing policy. After a change in policy, the good may or may not be sold in a particular region or season if its price is less than the consumers’ reservation price for that good. The purpose of this draft is to develop a preference structure that allows for zero consumption and how it could be implemented to assess the impact of new market access.en
dc.description.sponsorshipFunded under the project “Analyzing the Effects from Non-Tariff Measures (NTM) in Global Agri-Food Trade,” European Commission 7th Framework Program (Grant No. 227202) and the Cooperative Agreement (08-0101-0059-CA) between the Animal and Plant Health Inspection Service (APHIS) and Virginia Polytechnic Institute and State University (Virginia Tech).en
dc.format.extent15 pagesen
dc.format.mimetypeapplication/pdfen
dc.identifier.sourceurlhttp://www.gii.ncr.vt.edu/docs/GII_WP2011-2.pdfen
dc.identifier.urihttp://hdl.handle.net/10919/91412en
dc.language.isoenen
dc.publisherVirginia Tech. Global Issues Initiativeen
dc.relation.ispartofseriesGII Working Paper No. 2011-2en
dc.rightsIn Copyrighten
dc.rights.urihttp://rightsstatements.org/vocab/InC/1.0/en
dc.titleUsing the Trans-log Expenditure Function to Endogenize New Market Access in Partial Equilibrium Modelsen
dc.typeWorking paperen
dc.type.dcmitypeTexten
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