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Gary D. Thompson Almuhanad Melhim The University of Arizona

Estimating Import Demand for Fresh Citrus. Gary D. Thompson Almuhanad Melhim The University of Arizona. Linda Calvin Economic Research Service. Why Study Import Demand?. Quantify Impacts of SPS Measures: Elasticities (Own- & Cross-Price) Flexibility Estimates

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Gary D. Thompson Almuhanad Melhim The University of Arizona

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  1. Estimating Import Demand for Fresh Citrus Gary D. Thompson Almuhanad Melhim The University of Arizona Linda Calvin Economic Research Service

  2. Why Study Import Demand? Quantify Impacts of SPS Measures: • Elasticities (Own- & Cross-Price) • Flexibility Estimates • Estimate Welfare of Impacts SPS

  3. Characteristics of SPS Measures Clementines from Spain • Country- & Even Region-Specific • Date-Specific Aggregated Data Not Appropriate

  4. U.S. Mandarin Imports, 2000-03 Spain Australia S. Africa Morocco Source: FATUS

  5. Supply Side Drives Availability Clementines from Spain • Zero Import Quantity  No Import Price Unobservable, Not Unobserved • Not Censoring; Partial Truncation: Missing Price & Quantity • Micro-Data Censoring Models Not Appropriate

  6. Possible Approaches to Truncation • Incidental Truncation Sample selection is typically cross-sectional. Sample selection of import availability depends on agro-climatic factors (e.g. weather throughout the year)

  7. Truncation & Demand Systems • Multiple selectivity equations + Demand system equations Cross-Sectional - Sequential Selectivity Models (Lahiri & Song)

  8. Partial Truncation at Product Level Mandarins Oranges Tangerines

  9. Selectivity Equations: Probit/Logit • Binary Regression: Dep. Vbl. = 0 if no imports = 1 if positive imports Exp. Vbls.: Temperature; Precipitation in Production Region

  10. Marshallian Demand Equations • Incomplete Demand System LINQUAD: Weak integrability guarantees reliable elasticity and welfare measures.

  11. Demand Equations + Truncation • Introduce Correction for Partial Truncation as Demographic Shifter in LINQUAD: Not just inverse Mills ratio Multivariate normal is maintained

  12. Choice of Samples for Estimation 1. Consecutive Months Each Year • Oct. - Feb. Season; 1992-93 to 2002-03 • Aggregate Temporally to Eliminate Zero Quantities & Missing Prices • Semi-annual; 1989 - 2003

  13. Uncompensated Elasticities, Sample Median Tangerine Mandarin Orange Tangerine -0.026 -4.016 0.463 Mandarin -0.006 -4.375 0.039 Orange 0.374 -0.670 -2.268 Sample: Monthly, Oct.-Feb., 1992 – 2003 (T = 55)

  14. Uncompensated Elasticities, Sample Median Tangerine Mandarin Orange Tangerine -2.193 0.543 -0.134 Mandarin 0.020 -0.326 -0.463 Orange 0.133 -0.498 -0.101 Sample: Semi-annual, 1989 – 2003 (T = 30)

  15. Own-Price Elasticity, Mandarins Oct 02 Oct 99 Oct 00 Oct 01 Suspension of Spanish Imports

  16. Oct 02 Oct 99 Oct 00 Oct 01 Suspension of Spanish Imports Cross-Price Elasticity, Mand.-Orange

  17. Correction for Truncation • Necessary for modeling seasonal availability of imports (or exports). • Yields reasonable, if highly variable, elasticity estimates. • Uses data readily available, e.g. FATUS, NOAA.

  18. Future Work • Demand for Domestic & Imported Fresh Citrus • Apply to other specialty crops, e.g. asparagus, fresh tomatoes. • MLE or Non-Parametric Estimation

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