DEPICTING INTERNATIONAL PRICE TRANSMISSION IN NET TRADE SIMULATION MODELS: CURRENT STATE AND A NEW APPROACH

摘要

This paper presents the application of the Logit functional form for depicting price transmission from international to domestic prices in net trade simulation models. Using the EU beef market, it is shown that the Logit functional form is a flexibletool for the formulation of price transmission in net trade models. A smooth transition can be depicted from an import to an export based price, which may be at very different levels. Also the effects of tariff rate quotas and quantity restricted exportsubsidies can be included in the price transmission function.