An Armington

elasticity Elasticity often refers to: *Elasticity (physics), continuum mechanics of bodies that deform reversibly under stress Elasticity may also refer to: Information technology * Elasticity (data store), the flexibility of the data model and the cl ...

is an economic parameter commonly used in

models A model is an informative representation of an object, person, or system. The term originally denoted the plans of a building in late 16th-century English, and derived via French and Italian ultimately from Latin , . Models can be divided int ...

consumer theory The theory of consumer choice is the branch of microeconomics that relates preferences to consumption expenditures and to consumer demand curves. It analyzes how consumers maximize the desirability of their consumption (as measured by their pr ...

and

international trade International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (See: World economy.) In most countries, such trade represents a significan ...

. It represents the

elasticity of substitution Elasticity of substitution is the ratio of percentage change in capital-labour ratio with the percentage change in Marginal Rate of Technical Substitution. In a competitive market, it measures the percentage change in the two inputs used in respon ...

between products of different countries, and is based on the assumption made by

Paul Armington Paul may refer to: People * Paul (given name) Paul is a common Latin Language, Latin masculine given name in countries and ethnicities with a Christian heritage (Eastern Orthodox Church, Eastern Orthodoxy, Catholic Church, Catholicism, Protest ...

in 1969 that products traded internationally are differentiated by country of origin. The Armington assumption has become a standard assumption of international computable general equilibrium models. These models generate smaller and more realistic responses of trade to price changes than implied by models of homogeneous products. Yet no consensus on the magnitude of the elasticity exists. In different contexts, researchers tend to obtain substantially different estimates. A quantitative survey of 3,524 estimates of the Armington elasticity available in 2019 shows that – conditional on these differences and corrected for the

publication bias In published academic research, publication bias occurs when the outcome of an experiment or research study biases the decision to publish or otherwise distribute it. Publishing only results that show a Statistical significance, significant find ...

using

meta-regression Meta-regression is a meta-analysis that uses regression analysis to combine, compare, and synthesize research findings from multiple studies while adjusting for the effects of available covariates on a response variable. A meta-regression analys ...

techniques – the Armington elasticity lies in the range 2.5-5.1 with a median estimate at 3.8.

References

Elasticity (economics) {{econ-term-stub