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Abstract

Even if the original version of the Armington model is simple and plausible in estimation, the single CES and homotheticity assumptions are too restrictive for practical application and give biased price elasticities. This paper develops a generalized Armington model, which relaxes the single CES and homotheticity restrictions, and includes the Armington model as a special case. The Armington and generalized Armington trade models are applied to the Japanese meat import demand to demonstrate their performance. The empirical results rejected the two assumptions imposed on the Armington model. The generalized Armington model provides an alternative to the restrictive but indispensable Armington model.

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