ABSTRACT

This chapter reviews certain features of international trade theory and the empirical approaches used to quantify certain aspects of international trade. It discusses the theoretical topics for both agricultural and nonagricultural sectors. The chapter considers the empirical methodology draws heavily from studies on agricultural trade. The "effective tariff" model is actually a small-country assumption model in which both intermediate and final goods are considered, but it is treated separately because of the relative importance of the concept of effective tariff protection. A sizable amount of research has analyzed how a country's market share of world trade is changing over time. This has been done using a "constant market share" model. Many of the models outlined earlier usually assume that markets are competitive and that prices differ among countries by transportation costs, tariffs, and the like. The models include only producer and consumer groups and a governmental sector that introduces trade and domestic policies such as tariffs and price supports.