| Various reasons including cif/fob spread, differing political price protection depending on the net trade situation, and domestic transportation cost contribute to situations in which domestic prices are different in an exporting compared to an importing situation. Net trade models that take these differences into account must somehow deal with the problem of products that are not exported at the export-based price, because it is too low, and are not imported at the import-based price, because it is too high. In such a case, the equilibrium price lies somewhere between the export- and the import-based price. This paper presents the application of the Logistic functional form for depicting price transmission from international to domestic prices in the net... |
