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A Multicommodity Spatial Price Equilibrium Model with Exchange Rates and Non-Tariff Measures for Agri-Food International Trade

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Abstract

International trade of agri-food products is essential for food security and the well-being of societies. Governments have increasingly turned way from tariffs as policy instruments and are, instead, applying non-tariff measures (NTMs). The evaluation of such policies that include quotas, subsidies, quality standards, as well as sanitary and phytosanitary measures, through the rigorous quantification of their impacts on the flows, prices, as well as quality levels of agricultural commodities, is highly needed, as is the inclusion of exchange rates. In this paper, we construct a multicommodity spatial price equilibrium model with exchange rates for the international trade of agri-food products that includes quotas, subsidies, quality of the commodities, along with possible deterioration in transport, minimum quality standards, and ad valorem equivalents to quantify NTMs associated with agricultural products that can affect the health and well-being of humans, animals, and plants. The methodological framework is that of the theory of variational inequalities. The extensive numerical examples are focused on wheat exports from Ukraine to Middle Eastern and North African (MENA) countries during wartime. The numerical examples include sensitivity analysis for ad valorem equivalents and governmental subsidies as well as quality coefficients with important insights for decision makers and policy makers concerned about food security affected by volumes of available agricultural commodities, their quality, as well as their supply and demand prices.

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Acknowledgements

The authors are grateful to the partnership established between the University of Massachusetts Amherst and the Kyiv School of Economics and the Virtual Scholar Program.

Funding

The second author was funded, in part, through the University of Massachusetts Amherst - Kyiv School of Economics partnership with funding provided by the former university.

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Authors and Affiliations

  1. Department of Operations and Information Management, Isenberg School of Management, University of Massachusetts, Amherst, MA, 01003, USA

    Anna Nagurney

  2. Kyiv School of Economics, Mykoly Shpaka St. 3, Kyiv, 02000, Ukraine

    Elena Besedina

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  1. Anna Nagurney
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Contributions

A.N. and E.B. developed the model foundations jointly and the motivation for the timeliness of the work. A.N. did the coding of the algorithm and the running of it to solve the numerical examples. E.B. provided further discussions and analysis and interpretation of the results as well as the importance of them. Both read through and finalized the paper.

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Correspondence to Anna Nagurney.

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Nagurney, A., Besedina, E. A Multicommodity Spatial Price Equilibrium Model with Exchange Rates and Non-Tariff Measures for Agri-Food International Trade. Oper. Res. Forum 4, 84 (2023). https://doi.org/10.1007/s43069-023-00262-z

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