The Armington Model
Staff Working Paper
The Armington Model by Peter Lloyd and Xiao-guang Zhang was released on 8 February 2006, in conjunction with the staff working paper, Armington Elasticities and Terms of Trade Effects in Global CGE Models.
The paper explores how models adopting the Armington formulation differ from traditional models, in their quantitative properties and underlying theory of trade. In publishing its research in this area, the Commission hopes to clarify issues that arise as single-country and global trade models are increasingly used to assess the potential impacts of various types of trade liberalisation. Also see:
CONTENTS
Preliminaries
Cover, Copyright, Contents, Preface, Acknowledgments, Overview
1 Introduction
2 The Armington Model
2.1 Demand side
2.2 Supply side
2.3 Competitive equilibrium
3 Properties of the Armington model as a general equilibrium trade model
3.1 The Law of One Price
3.2 Comparative advantage
3.3 Gains from trade
3.4 Factor price equalisation
3.5 Other properties
4 Illustrations from an Armington CGE model
5 Limitations of the Armington model
References
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