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Are there halo effects of US grain export promotion?

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The objective of the research reported in this article is to examine both the own and cross effects of US export promotion for US and non-US grains. We focus on two previously neglected dimensions of the cross effects. First, we examine whether a halo effect (i.e. promotion for one US commodity positively effects demand for another US commodity) for US commodities exists. Second, we look at whether US grain export promotion has public goods characteristics, that is does US grain promotion have a halo effect on grain demand for other countries? We use a Linear Approximation of an Almost Ideal Demand System (LA/AIDS) model for US and non-US rice, wheat and sorghum that include US export promotion as one of the explanatory variables. Our goal is to provide further empirical evidence for the halo effect issue by using US grains as a case study since this sector has not been previously explored. In addition to estimating own and cross export promotion elasticities, the magnitude of cross effects on US market share for grain commodities are simulated for several policy scenarios involving alternative export promotion levels.

Document Type: Research Article


Affiliations: Department of Applied Economics and Management, Cornell University, Ithaca, 14853-7801 United States

Publication date: 2011-05-01

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