Estimates and Determinants of Armington Elasticities for the U.S. Food Industry

Abstract

AbstractThis paper provides estimates of elasticities of substitution between domestic and imported goods for 40 4-digit S.I.C. food manufacturing industries and explains the inter-industry differences among these coefficients in terms of industry sectoral characteristics. The results show that there is a wide range of variation among such elasticities and that the intensity of each industry’s percentage of output sold to final consumers, foreign direct investment, expenditures on advertising and the existence of import quotas affect the degree of substitutability between domestic and foreign goods in the face of a relative price change.