WHITHER ARMINGTON TRADE MODELS?

The Armington trade model distinguishes commodities by country of origin _and impo~t demand is determined in a separable two-step procedure. This framework has been applied to numerous international agricultural markets with the objective of ~odeling imp-ort demand. In addition, computable general ·- . - equilibrium (CGE) models commonly employ the Armington formulation in the trade linkage equatiops. The purpose of this paper is to test the 4rmington assumptions of -· homotheticity and separability with data from the international cotton and wheat markets. Both' parametric and nonparametric tests were performed and the e~pirical resμlts reject the Armingto~ assumptions. This has important implications for international trade.modeling an~ CGE modeling.