Tariff Elimination and the Competitiveness of Wine-Exporting Countries in Japan

Bilateral trade agreements between Japan and major wine-exporting countries have resulted in tariff eliminations in Japan. This raises questions about how tariffs affect the competitiveness of wine-exporting countries. The generalized dynamic Rotterdam model was used in estimating Japanese wine demand by source. Estimates were then used to project the impact of tariffs on imports of Australian, Chilean, French, German, Italian, Spanish, and U.S. wine. Tariff reductions primarily benefit affected countries, with limited adverse effects on competing countries. The elimination of tariffs on U.S. wine should offset any losses from competing trade agreements.

Research on Dynamic Game Model and Application of China’s Imported Soybean Price in the Context of China-US Economic and Trade Friction

China’s soybean price fluctuates due to the current economic and trade frictions between China and the United States. Brazil and the United States are regarded as two oligarchs in China’s soybean import market. A dynamic price game model is established, and price elasticity parameters are estimated by using statistical data and Rotterdam model. The stability of Nash equilibrium point is discussed through bifurcation diagram, maximum Lyapunov exponent, evolutionary trajectory, and time series diagram. The influence of price adjustment speed on equilibrium price is analyzed. The numerical simulation of price adjustment speed is carried out, which is compared with the actual situation of imported soybean price before and after the trade friction. The results show that the model constructed in this paper can reflect the changing trend of price and demand and predict the short-term import soybean prices of Brazil and the United States. The forecast accuracy of price fluctuation is high. The results provide model and theoretical reference for price game under trade disputes and provide methodological reference for forecasting the price of imported goods.

Assessment of Import Substitution Due to the Trade Embargo in Russia, 2014–2016

A sharp depreciation of the ruble during 2014–2015 has facilitated import reduction and growth of domestic production in Russia. In this article, we evaluate the effects of import substitution by estimating demand functions for imported and domestically produced commodities using the Rotterdam model. We calculate price and income elasticities for 17 aggregated commodity groups, and decompose changes in consumption into income and substitution effects. The effects of price changes and real income deterioration are extracted and analyzed. In the paper, we claim that the main factor that affected consumption demand during that period was a sharp appreciation of import. In a number of cases, this factor completely explains the changes in consumption, including some of the commodities which Russia embargoed in 2014. For several commodity groups, including Meat, and Preparations of vegetables and fruit, the import appreciation was a single main factor that affected the drop in import quantities (by 53% and 28% weight amount respectively) and growth of demand for domestic goods (by 34% and 55%).The second factor that affected demand was a decline of real incomes. For example, in the case of alcoholic beverages, the real income reduction explained the 14% decrease of demand for domestically produced goods, and the 34% drop in imports. A minor role in the events was played by substitution due to changes in domestic goods prices. This effect had a determining and statistically significant influence only in the case of demand reduction for domestically produced fish (by 12%).

EXTENDING THE ROTTERDAM DEMAND MODEL TO ANALYZE MARKET PARTICIPATION

The dependent variable in the Rotterdam model is shown to consist of two additive components: the proportionate change in the average product weight consumed by existing buyers and the proportionate change in the share of total consumers who actually purchase the product. Applying the extended model to household data on salmon consumption in France, results suggest prices have a larger effect on attracting new buyers to the product in question than on getting existing buyers to consume more. However, generic advertising was found to affect consumption intensity but have no effect on market participation in the short run.

An Assessment of Dynamic Behavior in the U.S. Catfish Market: An Application of the Generalized Dynamic Rotterdam Model

The generalized dynamic Rotterdam model was used in estimating U.S. demand for disaggregated catfish. The overall goal was to examine habit persistence in consumption and to determine the adjustment process in demand. Results indicated that it took up to 1 month for catfish-product demand to fully adjust to changes in expenditures and prices. Additionally, habit persistence played a role in demand where present consumption of a given product was positively affected by past consumption of that product. Consequently, U.S. catfish demand was significantly more elastic in the long-ran.

Impact of Income on Price and Income Responses in the Differential Demand System

An extension of the Rotterdam model is developed that makes the model's income flexibility and marginal propensities to consume varying coefficients. Frisch's duality relationships that the second partial derivatives of demand with respect to income and prices are independent of the order of differentiation are imposed with the marginal propensities to consume specified as functions of income and price, and the Slutsky coefficients specified as functions of income only. A uniform substitute specification is used to analyze the conditional demands for a group of beverages.