Measuring the price elasticity of import demand in the destination markets of italian exports

Author/s Alberto Felettigh, Stefano Federico
Publishing Year 2011 Issue 2011/1 Language English
Pages 36 P. 127-162 File size 585 KB
DOI 10.3280/POLI2011-011005
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We compare the price elasticity of import demand in the destination markets of Italian exports to the price elasticity in the destination markets of the other main euro-zone countries’ exports. We use the elasticities of substitution across varieties estimated for each destination market by Broda, Greenfield and Weinstein (2006). We find that Italy exports to markets that have, on average, lower price elasticity than the markets to which France, Germany and Spain sell their exports. The result is mainly driven by the motor vehicle and other transport equipment sectors. Net of these two industries, the average export elasticities of the four countries are basically identical. The sectoral and geographical composition of Italian exports therefore does not seem to expose them to a relatively more elastic demand, contrary to the indications found in part of the literature.

Keywords: Exports, elasticity of substitution, Armington varieties, international specialization, price elasticity of exports

Jel codes: F12, F14

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Alberto Felettigh, Stefano Federico, Measuring the price elasticity of import demand in the destination markets of italian exports in "ECONOMIA E POLITICA INDUSTRIALE " 1/2011, pp 127-162, DOI: 10.3280/POLI2011-011005