Armington Elasticity Varies by Importer, Impacting Policy Changes Dramatically.
The Armington elasticity, which measures how prices affect demand for goods in international trade, varies between countries. The elasticity of demand with respect to destination prices is influenced by source prices and trade costs. The elasticity of demand with respect to source prices is more consistent than the Armington elasticity across countries. This means policy changes have a bigger impact than previously thought.