GLOBIOM Trade and Markets

GLOBIOM is a spatial price equilibrium model. This kind of model is particularly useful for the prediction of commodity trade flow patterns between spatially separated supply and demand markets. It is assumed that goods are homogenous and that markets are perfectly competitive.

International Trade

Tariffs and transportation costs are introduced and are differentiated among each pair of partner and for each product.

Tariffs come from the MAcMap database which includes exhaustive information on the level of applied trade barriers across the world.

Transportation costs have been computed based on the distance between each pair of regions and the transportability of the good (Hummels, 2001)1.

The applied calibration method which ensures consistency between trade flows, net trade, trade costs and prices, and avoids large discrepancies between observed and computed trade flows is adapted from Jansson and Heckelei (2009)2.

Market

The market is represented by implicit product supply functions based on detailed, geographically explicit, Leontief production functions, and through explicit, mostly constant elasticity, product demand functions. The market equilibrium is found through maximization of the sum of producer and consumer surplus subject to resource, technological and political constraints (McCarl and Spreen,1980)3.








1 Hummels, D. (2001). Toward a Geography of Trade Costs. GTAP Working Paper No. 17. [download]

2 Jansson, T. and Heckelei, T. (2009). A new estimator for trade costs and its small sample properties. Economic Modelling 26: 489-498. [download]

3 McCarl, B. A. and Spreen, T. H. (1980). Price Endogenous Mathematical Programming as a Tool for Sector Analysis. American Journal of Agricultural Economics 62: 87-102.  [download]





Print this page

Last edited: 07 March 2012

CONTACT DETAILS

Petr Havlík

Program Director and Principal Research Scholar Biodiversity and Natural Resources Program

Research Group Leader and Principal Research Scholar Integrated Biosphere Futures Research Group - Biodiversity and Natural Resources Program

GLOBIOM MODEL

Return to GLOBIOM main page for

International Institute for Applied Systems Analysis (IIASA)
Schlossplatz 1, A-2361 Laxenburg, Austria
Phone: (+43 2236) 807 0 Fax:(+43 2236) 71 313