The purpose of this paper is to develop a formal representation of the imperfect substitutes model (ISM) of partial equilibrium, trade policy analysis and to conduct sensitivity analysis on the behavioral parameters of the model.
The paper develops an ISM in a manner that is conformable to more complex, applied general equilibrium models of trade policy analysis.
The paper presents a set of sensitivity analyses on key behavioral parameters for a better understanding of the model's properties.
Sensitivity analysis on the values of behavioral parameters in ISMs needs to be conducted by trade policy modelers.
The ISM is made more explicit here than in most representations, something that will be of great use to practitioners.
While widely used in trade policy circles, the ISM is rarely explicitly formulated, nor the role of its behavioral parameters explored.
The author would like to thank Sasidaran Gopalan, Ammar Malik and an anonymous referee for helpful comments.
A. Reinert, K. (2014), "Sensitivity analysis in an imperfect substitutes model of preferential trade", Journal of Economic Studies, Vol. 41 No. 5, pp. 630-643. https://doi.org/10.1108/JES-05-2013-0064Download as .RIS
Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited