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Abstract

This study estimates demand for wheat differentiated by classes using a dynamic AIDS model for the United States and the European Union (EU). The results suggest that imported wheat is more price responsive than domestic wheat in the U.S. market but not in the EU market. The high price responsiveness of Canadian wheat in the U.S. market may suggest that the Canadian policy that reduces prices in the U.S. market or U.S. export subsidies that raise prices of U.S. wheat could be expected to give rise to substantial substitution of Canadian for U.S. wheat.

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