Disruption on urban chicken markets in Haiti and Cameroon: The role of socio-economic factors on chicken's consumption

Keywords: Chicken, urban consumption, developing countries, household's characteristics, Cameroon, Haiti. JEL classifications: Q18 (Agricultural Policy, Food Policy), Q17 (Agriculture in international Trade), D 12 (Consumer Economics: Empirical Analysis)

Since the beginning of 2000s, imports of frozen pieces of chicken from the European Union or America have considerably increased in several African and Caribbean developing countries, competing with local chicken meat. This evolution has contributed to a complete transformation of urban consumption habits as regards poultry meat. Investigations have been done in 2005 in Yaoundé (Cameroon) and in 2006 at Port-au-Prince (Haiti) applied to 180 urban households in each country, showing that imported frozen pieces of chicken have widely substituted for the local chicken which has already quite disappeared in Port-au-Prince, but is still appreciated by Yaoundé consumers. This article aims to assess the impacts, on such an evolution of i) socio-economic features of consumers and ii) the impact of chicken consumption habits, for what imported versus domestic chicken may be more or less adapted. In order to take into account numerous qualitative variables, econometric regressions are using synthetic continue variables built on multiple correspondence analysis of qualitative variables. Results differ from Port-au-Prince to Yaoundé.

Perturbations des marchés urbains de viande de poulet Haïtien et Camerounais :

Influence des facteurs socio-économiques sur la consommation de poulet Résumé: Depuis le début des années 2000, les importations de volaille congelée en provenance d'Europe et d'Amérique se sont considérablement développées dans plusieurs pays en développement d'Afrique et des Caraïbe, concurrençant les productions locales de poulet. Cette évolution s'est traduite par une mutation des habitudes de consommation de viande de poulet en milieu urbain. Des enquêtes, menées en 2005 à Yaoundé (Cameroun) puis en 2006 à Port au Prince (Haïti), auprès de 180 ménages urbains chaque pays, ont montré que les découpes importées de poulet congelé se sont largement substituées au poulet local. Ce dernier a presque disparu à Port-au-Prince, mais reste apprécié des consommateurs à Yaoundé. Cet article vise à mettre en évidence les déterminants de cette évolution en évaluant d'une part le rôle joué par la situation socio-économiques des ménages urbains, et d'autre part le rôle joué par les modes de consommation de poulet impact, auxquels les différents produits sur les marchés sont plus ou moins bien adaptés. De façon à prendre en compte les très nombreuses variables qualitatives, les régressions économétriques utilisent des variables synthétiques continues construites sur la base d'analyse des correspondances multiples. Les résultats obtenus diffèrent sensiblement d'une zone enquêtée à l'autre.

Introduction

During spring 2008, several developing countries have known riots related to food prices increase on international markets -rice and other cereals, but also sugar and meat (FAO, 2008a[START_REF] Fao | Crop Prospects and Food Situation n°1[END_REF](FAO, , 2008c)). Food riots left forty dead in February 2008 in Cameroon (Yaoundé, Douala) and killed at least five people in Haïti (Port au Prince) in April 2008. Violent urban protests and demonstrations occurred in many countries in Africa, Asia and Latin America.

That crisis reminds that food security is not achieved everywhere, and reopens the debate about food dependence of developing countries on imports, which raises problems in case of world prices surge. That issue is not new. [START_REF] Cheyns | La construction de la qualité des produits alimentaires, le cas du soumbala, des céréales et des viandes sur le marché de Ouagadougou au Burkina Faso[END_REF] show that, to insure cities food security, the urbanization speeding-up in poor countries is accompanied by the growth of food imports from international markets, which actually competes with local production, even if that trend has repercussions on eating patterns and gives the opportunity for agricultural areas to capture new urban food markets.

Since the beginning of 2000s, in order to let poor people accede to meat consumption, several African and Caribbean countries have opened their domestic chicken market to foreign imports, by reducing import tariffs. Thus imported frozen pieces of chicken from the European Union or America compete with local chicken meat, causing the collapse of many poultry husbandry and the loss of many jobs in the local chicken food chain. The aim of this paper is to analyze the competition between domestic and imported poultry meat in developing countries from the demand point of view. We choose to study the cases of Yaoundé (Cameroon) and Port-au-Prince (Haiti). Cameroon and Haiti are both developing countries confronted with recent high increase of chicken imports.

Before 1995, Cameroon ad valorem tariff on chicken imports was 20 %1 . Since the 1990's, in order to open the market and let poor people to accede to meat consumption, Cameroon, like other African countries, has classified poultry as essentials. Hence, from 1995 and until 2005, corresponding import tariff has been reduced to 5%, other taxes being unchanged (Direction générale des douanes du Cameroun, from Ccima, 2005). During the same period, a large liberalization of trade exchanges has occurred in Haiti, in the frame of the implementation of Structural Adjustment Programs. In 1995, the last tariffs reform instituted a simplified system with only six levels of tariffs: 0, 3, 5, 10, 15 and 57.8 % (the last being only applied for gasoline). As a result, import tariffs on agricultural commodities, like poultry meat, decreased from 40-50 % to 15 % or less. Note that the actual Haitian tariff on poultry meat imports (15%) is lower than the WTO bound tariff (20%) (WTO, 2003;WTO, 2006).

Available FAOSTAT data from 1985 to 2006 about poultry meat Haitian and Cameroonian imports show that in both countries the liberalization of chicken import tariff coincides with a large increase of corresponding imported quantities. 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 tonnes

Cameroon Haïti

Source : FAOSTAT Concerning poultry meat production, because of a lack of consistent national statistics, FAOSTAT only provide estimated and regular figures for Cameroon and Haiti. Those data are in contradiction with NGO's and producer's associations' statements which denounce the competition between domestic and imported chicken (mainly from the European Union or America) and the resulting collapse of many poultry husbandry and the loss of jobs 2 in the local chicken food chain 3 . They notably recommend going back to the previous situation by reinstituting high level of border tariff protection against imports of chicken pieces. This position is reinforced by the frequent use of export subsidies on American or European chicken supply, which are considered as unfair practices beside domestic chicken production.

On the other hand, during the same period, chicken consumption has increased in Haitian and Cameroon populations, leading to move near the recommended level by the World Health Organization en terms of animal protein intakes (Teleu- [START_REF] Ngandeu | Première évaluation du secteur avicole au Cameroun : structure et importance du secteur avicole commercial et familial pour une meilleure compréhension de l'enjeu de l'Influenza aviaire[END_REF].

In both Cameroon and Haiti, a rapid observation of food markets shows that there are actually three types of chicken supplied to urban consumers (Awono Bessa, 2008):

-Rustic chicken, which is called "Villageois" in Cameroon and "Creole" in Haiti, is produced at family home, in only precarious shelter. In Cameroon, rustic chicken is most often breed in rural areas, and it is sold alive directly to the consumer or via peri-urban markets after being collected at the village. In Haiti, one can find Creole chicken in urban market places. That chicken is especially used for religious (Cameroon) or voodoo (Haiti)

ceremonies.

-Local flesh chicken, sometimes called "White chicken" in Haiti, is produced in semiindustrialized farms. Production chain, feeding, sanitary and veterinary following are rationalized, and animals live in permanent structures. It is sold alive at traditional urban markets. That type of chicken has been, for few years, actually very hard to find in Haiti, whereas it still exists in Cameroon.

Rustic and local flesh chickens are essentially sold whole and alive. Consumers have to slaughter and clean it out themselves or pay a supplement for that. In some rare supermarkets in Yaoundé, one can find whole local rationalized flesh chicken sold ready to cook.

-Imported chickens are usually sold frozen and by pieces at traditional urban markets, supermarkets or fish shops which have freezer. One can also find few entire frozen chicken.

Taking the cases of Cameroon and Haiti, this paper aims to assess the respective role, on the evolution of urban households' chicken consumption, of i) socio-economic households' Cameroon is an African developing country, member of African-Caribbean-Pacific group.

Haiti is located in Caribbean -American area and is classified as one of the last developed countries in the world. Table 1 gives some economic reference data for Cameroon and Haiti.

Those differences are interesting because they may impact on consumers' adaptation to the development of frozen chicken cuts imports newly imported products. (1) "The intensity of food deprivation indicates how much food-deprived people falls short of minimum food needs in terms of dietary energy. It is measured as the difference between the minimum dietary energy and the average dietary energy intake of the undernourished population (food-deprived). The intensity of food deprivation is low when it is less than 200 kilocalories per person per day and high when it is higher than 300 kilocalories per person per day. The greater the food deficit, the greater the susceptibility for health risks related to under nutrition" (FAO calculations).

(2) That is the highest score in the world Sources: FAO website ; CNUCED, 2008 ; World Bank website; UNICEF Website

In order to examine the determinants of food consumption, standard models of household consumption decisions, proposed by [START_REF] Samuelson | Social indifference curves[END_REF], or the implementation of Almost Ideal Demand System (AIDS) models are usually used because they are perfectly suited for making projections in terms of changes in households consumption expenditures. The standard household and AIDS models have been applied partially to Sub-Saharan countries by [START_REF] Strauss | Determinants of food consumption in rural Sierra Leone: Application of the quadratic expenditure system to consumption-leisure component of a household-firm model[END_REF], [START_REF] Tsegai | Determinants of urban households' demand for cassava and cassava products in Kaduna, Northern Nigeria: The application of AIDS model[END_REF], [START_REF] Kone | Analyse des déterminants de la demande de viande bovine au Mali[END_REF], [START_REF] Simister | Household Consumption and Nutrition in South Africa[END_REF] and [START_REF] Ruel | Patterns and determinants of fruit and vegetable consumption in subs-Saharian Africa: a multicounty comparison[END_REF]. But they require complete data, dealing with price, consumption and supply quantities, and household budget, collected annually on the basis of consumption budget investigations. If such approaches are possible in developed countries, where consumption budget surveys are done every year, one can state that, except in South Africa [START_REF] Simister | Household Consumption and Nutrition in South Africa[END_REF] and maybe other rare countries, there is a wide scarcity of reliable information about food consumption in Africa and the Caribbean, because of a total lack of statistical opinion polls. Those that exist are often outdated: for example the last corresponding data have been collected in 1999 in Haiti (IHSI, 2008) and in 2001 in Cameroon (NIS, 2008), and results have been available only four to five years later, rendering ineffective decision-making and projections obtained in most developing countries.

Recent studies in developing countries have implemented small and ad hoc surveys, taking into account the dynamic development of demand such as recent evolution of eating habits.

For example [START_REF] Dury | The determinants of urban plantain consumption in Cameroon[END_REF] or [START_REF] East | Determinants of urban bushmeat consumption in Rio Muni, Equatorial Guinea[END_REF] use temporal data collected on households and market and restaurant customers to understand factors influencing urban consumption.

The main study about meat consumption was done by [START_REF] East | Determinants of urban bushmeat consumption in Rio Muni, Equatorial Guinea[END_REF] to understand the determinants of urban bush meat consumption in Rio Muni (Equatorial Guinea). [START_REF] East | Determinants of urban bushmeat consumption in Rio Muni, Equatorial Guinea[END_REF] use interviews with 100 consumers in households and 37 restaurants customers. They

show that Guinean consumers have a strong preference for fresh meat and fish over frozen products, but for price considerations they most often eat frozen foods. The degree to which meat consumers are able to satisfy their preferences is significantly related to their income.

Frozen produce is considered as an inferior good, with negative income elasticity, while fresh produce, including bush meat, is a normal good.

Our study follows the same logic as that of [START_REF] East | Determinants of urban bushmeat consumption in Rio Muni, Equatorial Guinea[END_REF]. We consider urban chicken consumption in a context of crisis in poultry food chain linked with the development of chicken imports. A first innovation in our research is to carry out a comparison Cameroon in Africa and Haiti in the Caribbean. Both are developing countries which apparently face the same situation: imported chicken compete with declining local chicken production. We aim to analyze if this common evolution leads to similar results in terms of urban consumer's habits in the two countries, in order to predict the likely future trends in chicken consumption and suggest potential differentiated policy responses for each country.

Two similar investigations of eight weeks have been done successively in Yaoundé (Cameroon) and Port-au-Prince (Haiti). Representative sample of urban households have been polled about their chicken consumption: essentially qualitative data about preferences, habits and willingness to pay for chicken meat, but also socio-economic households' features have been collected. To deal with the numerous qualitative collected variables, a second innovation in that paper lies in the method we adopt: econometric regressions use synthetic continue variables built on multiple correspondence analyses of qualitative variables.

The second section of the paper presents the survey and its preliminary descriptive statistical analysis. The third section presents the method used to implement regressions and their main results. The last section concludes, focusing on the perspectives, for local chicken, to restore their previous urban consumption share, respectively in Cameroon and in Haiti.

The household survey

Survey description 5

In order to identify the relevant determinants of chicken consumption for consumers, a To ensure a representative sample, the quota method has been applied (like [START_REF] Dury | The determinants of urban plantain consumption in Cameroon[END_REF]:

the allocation of several control variables (or criteria) is similar in the sample to the distribution in the global population. Control criteria apparently have no particular relationship with chicken consumption; their use aims at minimizing the risk of ignoring some parts of populations in our sample. For household pool, control variables were household size and types of housing (equipment and infrastructures available). Available statistics about their distribution in the global population have been taken from IHSI (2003), ECAM (2000) and INS (1994). In the same logic, to minimize distortion in collected data, the localization of each inquiry had been decided beforehand on a map, with respect to demographic weight of the sites of investigations and/or places of consumption.

Examples of using control variables to implement the quota method are presented in appendix 16 . The survey questionnaires are available from the authors upon request.

Boxes 1 and 2 briefly present Yaoundé and Port-au-Prince. Port-au-Prince, more than 1.2 millions of inhabitants, is the political, administrative, and economic capital of Haiti. It is also the capital of the West Region and one of the 130 districts of the island. Port-au-Prince district has been cut into four administrative "communes" : Delmas, Pétion-ville, Carrefour, Port-au-Prince commune. Commune of Port-au-Prince is the headquarters of public institutions (Presidency, Ministries and other republican services), universities, cultural centres and museums; that is the "old town". All other communes of Port-au-Prince district actually are suburb areas growing with demographic pressure. The town has been built on many hills and there is like a "positive gradient of richness with the altitude of accommodation". Port-au-Prince commune is located under little mountains: the Mornes. Except administrative offices, the commune is bordered by several very large shanty towns where there is high level insecurity (Martissan, Carrefour-Feuille, Cité l'Eternel). Pétion ville is at the South suburb of Port-au-Prince, at the top of a hill. This area has been a place of holidays for a long time. It is composed by luxurious villas and constitutes the rich part of the city. Delmas takes place in the northern part of Port-au-Prince. That is the real industrial heart of the town with the port, the airport, the industrial area and the head offices of many societies and firms. Near to the airport, there are huge shanty towns: Cité-Soleil at the West, which actually constitutes a no-rights area, with very high insecurity, and Maïs-Gâté in the South. Carrefour is the more southern commune of Port-au-Prince district. Although it is bordered by shanty towns (Brochette, Mon Repos), this part of town is very quiet, and houses many beaches and touristy sites.

Subdivision

Preliminary survey results

A preliminary analysis of survey results highlights several interesting issues which would motive developing a more precise econometrical analysis in sections 3.

a-There is a gap between preferences and effective consumption. Source: Household survey. In brackets: total number of answers.

Figure 2 shows the large difference between declared preferences, out of price matter, and the reality of household's consumption. While in both countries, imported frozen cuts are, out of price matter, the less appreciated type of chicken, 49% of Cameroon households say they usually consume them for familial meals and they are 67% for ceremonies meals. Haitian households do not make a difference between familial or ceremonial chicken consumption, and 76 % of households declare they usually consume imported frozen cuts. 82% of households in Yaoundé and 40 % in Port-au-Prince usually consume local flesh chicken;

those results are, in each case, bigger than respective scores of local flesh chicken preference (6% and 66 % respectively). Whereas rustic is the preferred chicken for 88% of Haitian households, it is only consumed by 31 %. Only 10% of households usually consume rustic chicken in Cameroon, and especially for familial meals, not for ceremonies, what is less than the third of the preference outcome (31%). All those results let us think the arrival of imported frozen chicken cuts actually introduced a substitution between types of chicken.

In Port-au-Prince, out of price consideration, the quasi totality (88%) of household does prefer rustic chicken; there is then no sense to analyse socio-economic determinants of such high figure. However the gap between households' preferences and effective consumption is particularly huge in Port-au-Prince, like if imported frozen cuts and local flesh chicken did constitute a second best choice when rustic chicken is not available, and remaining rustic chicken effective consumption seems not to be possible to be replaced.

In Yaoundé, households also clearly prefer domestic chicken to imported one (97 % at all) out of price matter, but there is a difference between rustic one and local one (respectively preferred by 31 % and 66 % of households).

In Yaoundé there is a marked difference between usual and ceremonies uses of chicken.

While the three types of chicken are consumed for familial meals (with an advantage for local flesh chicken), consumption of imported frozen cuts increases for ceremonies meals to the detriment of both rustic and local flesh chicken: when a large quantity of chicken has to be cooked (like for ceremonies meals), imported frozen cuts are advantageously chosen. On the contrary, for household's meals, domestic chicken (rustic or flesh) continues to be used. It seems that imported frozen cuts constitute an imperfect (but largely used) substitute to local chicken, even if local flesh chicken continues to be largely consumed and appreciated by consumers. For households who prefer rustic chicken, local flesh chicken constitutes an acceptable substitute.

Figure 3 represents the distribution of answers to the question about households' criteria of choosing one type of chicken more than another. Answers to this survey question was free, but we have regrouped all the answers in four headings according to the answer being relative to commodity price, taste, availability, or the fact it was sale by pieces or not. Figure 3 only takes into account the criterion declared in first position to that question (one answer by household). We can see on the figure that declarations are very similar in Port-au-Prince and Yaoundé: the price is the first criterion of choice, with more than 80 % of answers, before the taste and the sale by pieces. Note that in Yaoundé, the criterion relative to "taste" seems to assume to a patriotism attribute: a lot of households have declared "I would prefer the local chicken because it is locally produced, anyway it is better". Issue of availability is very rarely questioned in the survey, and only in Yaoundé.

Figure 3. First criteria of chicken choice declared

Furthermore several households polled in Yaoundé mentioned a traditional chicken sharing out, coming from forest people, which certainly participates to maintain the entire local flesh chicken on tables at family meals in Cameroon. Gizzard, heart, wishbone and foots are given to the householder: it would be particularly very bad felt to offer a chicken without wishbone to a householder. Wings are for young ladies: they have to prepare themselves to fly away getting married later. Chicken legs are due to young boys. At last neck and rump are for housewife who has cooked the meal. Imported chicken, sold by pieces, is inappropriate to that traditional allocation.

Such a tradition has not been met in Haiti where, since 1991, the crisis of local chicken industry has introduced a deficit of supplying urban markets in local flesh chicken [START_REF] Chancy | Identification de créneaux potentiels dans les filières rurales haïtiennes[END_REF]. But in the same time, rustic Creole chicken is still usual in Haiti, and is the only chicken appropriate for voodoo ceremonies.

Lots of Haitian polled consumers have declared that buying imported chicken by cuts was a way to eat chicken at low costs, by choosing only the interesting wanted piece. Moreover, the use of common familial meals seems to decrease via the development of a new form of individual home outside fast food for lunch but also for dinner 7 .

b-Recent evolution of chicken consumption

Several consumers polled in Yaoundé, and a lot of consumers in Port-au-Prince, have declared that chicken was one of the most appreciated foods. Most people have insisted to explain that supplying cooked chicken pieces to hosts is very important to give good impression. Furthermore, for polled households in Port-au-Prince, cheap imported frozen cuts actually give the possibility to Haitian households to supply meat to the entire family.

Chicken is considered as an accessible substitute commodity to other expensive meat. A look at meat prices in Haitian markets, and [START_REF] Chancy | Identification de créneaux potentiels dans les filières rurales haïtiennes[END_REF] 7 Home out chicken consumption has also been analysed via another ad hoc survey in Yaoundé and Port-au-Prince; the presentation of their detailed results will be the core of a further paper.

In Yaoundé, chicken consumption has globally increased for one third of households, decreased for 42% ; 25 % of households left declared they just have changed the type of chicken they use to buy for the five last years. Recent (negative) evolution of household revenue is the raison presented in case of decreasing chicken consumption while in case of increasing consumption, (positive) evolution of household consumption explains only 27 % of answers, the 73 % left being justified by arrival of imported cuts cheaper and / or sold by pieces. The substitution of one type of chicken to another is mainly explained by arrival of imported cuts; only 7 % of households put forward a revenue argument.

Answers are more detailed for Port-au-Prince because the Haitian survey had been completed

after the experiment of Cameroon survey in order to get more precise information especially about substitution among chicken types at least at Port-au-Prince. In Port-au-Prince 47 % of households declared they had not changed their chicken consumption habits for the five last years. They were 45 % to declare they have increased their chicken consumption (with or without substitution) and only 8 % to say they just have substituted one type of chicken to another. Supplementary questions to Haitian survey give precisions relative to the nature of chicken substitution that occurred in Port-au-Prince.

Households were questioned about the type of chicken they did consume five years ago that has been replaced by another type of chicken. One can see the corresponding answers on

c-Reserve prices differs among chicken types

Reserve prices have been measured via the answers to following survey question: "What is the price from which you think the chicken is too expensive?" Table 2 compares In brackets: standard deviation; in square brackets: number of answers.

In 2005, 1 US$ = 37 Gourdes, = 518 F CFA.

Source: Average of household survey results.

Prices order are quite similar in Cameroon and Haiti: a kilogram of imported frozen cuts is highly cheaper than any domestic chicken, and rustic chicken is sensibly more expensive than local flesh chicken. But while in Port-au-Prince, willingness to pay for local flesh chicken is clearly lower than for rustic chicken, in Yaoundé the difference between both prices is very small. Such results are consistent with the idea that local flesh chicken constitutes in Yaoundé a relative good substitute for rustic chicken, whereas it is not exactly adapted to the same use as rustic chicken in Port-au-Prince. Source: Household survey results.

In Yaoundé, difference between willingness to pay for local flesh or rustic chicken is marked in only three quarters: Yaoundé 3, 5 and 6. Elsewhere there is no significant difference. In Port-au-Prince like in Yaoundé, one can suppose that chicken sellers adapt trade negotiations with consumers accordingly with differentiated purchasing power between communes.

Average highest prices have been declared by households living in Pétion-Ville, the richest commune of Port-au-Prince, and especially for rustic chicken and imported cuts. Differences of declared prices between others communes' households are not so marked. This result has to be confirmed by assessing the role of household's level of life in the establishment of household's reserve price.

The arrival of frozen imported chicken seems to have widely modified consumers' habits. This form of chicken meat is clearly cheaper than domestic (local or rustic) chicken.

Preliminary analysis of survey results seems to show socio-economic household's feature have effect on recent evolution of chicken consumption. But frozen imported chicken is also sale by cuts. Cuts are easy to use, and may be particularly well adapted to urban ways of cooking the chicken. At the opposite, the use of locally produced chicken seems to stay in Yaoundé in links with traditional practices of sharing the different chicken parts during familial meals, or regards to a preference of local chicken. It seems also that some rare particular mode of cooking (fumed, roasted) most often use entire chicken. In Port-au-Prince, entire rustic chicken is required for voodoo practices. The question is: to what extent the recent evolution of chicken consumption is related to households' level of life or linked to household's forms of consuming the chicken? In other words, do new facts concern all households at the same level or are chicken consumption new features distributed in function of consumers' level of life?

Following section aims to measure the impact of urban households' socio-economic and forms of consuming features on their effective choice between imported, local or rustic chicken, their willingness to pay each type of chicken.

The impact of level of life on chicken consumption features

The statistical use of qualitative variables

Variables we try to explain are presented in table 3. Tables 4, 5 and 6 present available explicative variables available for each household.

AMC results

AMC implemented to available explicative variables relative to Yaoundé households' conditions of life (table 4) identifies a dimension explaining 17.81 % of all available variables. We call it "LevLife". In the same way, AMC implemented to Yaoundé households' socio-economic variables (table 5) and households' chicken consumption features (table 6) identify "Status" and "Elab" explaining respectively 23.54 % and 32.88 % of explaining variables. Levlife, Status and Elab are continue scales giving, for each household, its individual position in terms of level of life, socio-economic status and level of elaboration of cooked chicken. Figure 7 gives position and contribution of significant (> 2%) explicative variable for the three new built synthetic variables.

Regression model

A Logit model has been implemented to explain preferences, effective consumption and reserve prices, using LevLife, Status, Elab and other available variables designed in table 7.

Note that variables relative to usual buying places are correlated to choice of chicken type, that's why they only have been taken into account for regression about reserve prices, not for preferences and effective consumption. The built synthetic variables LevLife and Elab are not correlated at all. We used type of the household to explain chicken consumption. Households with man centred are the reference in the following estimation.

a) Preferences and effective consumption

Logit model does not give any significant result for Preferences, in consistence with the observation quite all consumer actually do prefer local chicken in Yaoundé, and rustic chicken in Port-au-Prince (cf. figure 2). Table 8a and 8b present results of estimation for the probability to consume rustic or local or imported chicken with a logit model. Coefficient have been estimated with those associated to the rustic one normalized to zero. Table 9 presents results of the logit model estimation for chicken consumption at festive meals. 9): LevLife and Elab have negative impact on choosing imported chicken. But note that LevLife is significant for usual meals, and Elab only for festive meals, and not for usual chicken consumption. The type of household defined by nuclear seems to be significant with a negative effect on imported chicken consumption (at festive meals or not) compared to men centred households. The LR tests show that estimated coefficients are jointly significant both for usual and festive consumption. However, the 2 MacFadden 1 for the festive and usual consumption model, as a measure of goodness of fit of the regression are rather low. This is surely due to the effect of omitted variables. Important determinants for consumption choices as revenue and prices could not be observed. 8 No household has declared using rustic chicken for festive meals. It seems that for festive meals, the way of cooking the chicken actually plays a major role in the choice of chicken type. The more elaborated (fumed, grilled, and roasted), the more households choose local chicken. Imported chicken is adapted for less elaborated cooking ways: fried and sauce chicken. Elab plays in the same sense as LevLife, as if fried and sauce were more popular ways of chicken at the difference to roasted, grilled and fumed chicken.

In Port-au-Prince, pooled households don't make any difference between usual and festive chicken consumption. Table 11a and11b Results for Port-au-Prince show that variables LevLife and Status have significant effect on consumption of imported chicken. As expected, they all three have negative impact on imported chicken consumption. It is consistent with the hypothesis that imported chicken constitutes an imperfect substitute to domestic (rustic or local) chicken for well-off consumers even it let poor households access to poultry meat consumption. Note that the way the chicken is cooked (variable Elab) has significant impact on households' chicken type choice. Like in Yaoundé, fumed or sauce chicken seems to be correlated to domestic chicken's use, and usually requires whole chicken, contrary to fried chicken, for which frozen chicken cuts are particularly well adapted. The LR tests show that estimated coefficients are jointly significant.

But, the 2 MacFadden 1 for the two regression model, as a measure of goodness of fit of the regression are not very high.

c. Reserve prices

Ordinary least square regressions have been implemented to explain reserve prices for each type of chicken (nor for rustic chicken in Yaoundé, neither for local chicken in Port-au-Prince, because of lack of enounced corresponding reserve prices). We used usual chicken buying places as explanatory variables. Traditional urban market is the buying place reference in the following estimation. For local chicken, Status has significant negative effect on household's reserve price. Maybe the fact that households in higher socio-professional position often eat chicken, gives them the possibility to find the way to pay less. Note that buying places have significant effect on local chicken reserve price: compared to traditional urban markets, local chicken is cheaper for households buying at peri-urban markets, more expensive for households buying at farms.

Elab have significant negative impact on imported but also local chicken's reserve prices. For the latter, the interpretation of such a result has to be refined. Two similar surveys in Port-au-Prince (Haiti) and Yaoundé (Cameroon), aimed to identify the determinants of recent evolution of chicken consumption in urban area of two different developing countries. Starting from preliminary descriptive results of surveys, the paper tried to put the light on the differentiated effects of opening poultry domestic market to world imports on segments of urban population and households' ways of consuming the chicken.

As expected, and in conformity with associations studies 9 which describe the crisis of chicken industry which has occurred since the opening to frozen chicken imports, surveys we have carried out in both countries confirm that the relative lower cost of imported chicken has introduced a substitution of imports for domestic chicken and a large part of households declare they have increased their consumption of chicken.

In order to do distinguish between socio-economic consumer's characteristics and households' features of consuming the chicken, we have implemented AMC in order to define an aggregated continue variables reflecting those two aspects, and used obtained synthetic variables as parameters in Logit regressions. This combined method is particularly interesting to account for people socio-economic status in developing countries where it is not possible to get precise information about individual professional situation and revenues, but possible to get multiple qualitative data to that concern.

Results shows that if level of life actually has an impact on the type of chicken Yaoundé or

Port-au-Prince households actually consume, and seems to play in favour local chicken compared to imported one, the way the chicken has been cooked also has effect. Imported chicken seems for example, not perfectly adapted to roasted, grilled or fumed chicken, contrary to fried and sauce mode of cooking. Furthermore, and especially in Yaoundé, it seems that the later is particularly significant in case of festive meals, while revenue effects are higher for usual chicken consumption. Port-au-Prince households don't make any difference between usual versus festive chicken consumption. Results dealing with reserve prices are not basically interpretable; however they suggest that chicken meat is considered as essential good by Cameroon urban households while as superior good by Haitian urban households. This intuition would merit to be confirmed, because it would have differentiated repercussions in terms of possible re-introduction of local chicken industry.

Those preliminary results have to be specified adding available data not already used. Hence the use of cut versus whole chicken has to be introduced to refine the variable Elab for 9 Agir Ici, 2004 ; ACDIC, 2005

  features and ii) chicken consumption habits, for what imported versus domestic chicken may be more or less adapted. In particular, we aim to know to what extent imported chicken is considered as substitute to local chicken, or if this new available commodity has actually replaced local chicken in urban households' demand. Do substitutions between domestic and imported commodities implemented by urban consumers differ from Haiti to Cameroon? Cameroon and Haiti differ by their geographical situation and level of development 4 .

  specific survey was conducted during May-July 2005 in Yaoundé, and during June-August 2006 in Port-au-Prince. After a first examination of urban chicken meat trade (types of chicken and associated markets), a formal questionnaire related to the evolution of urban consumption was implemented to a sample of 180 urban households in each country. The Port-au-Prince survey has been lightly modified compared to the Yaoundé's one in order to take into account failing that had been identified during the work in Cameroon.

  called "the city of seven hills", has been the administrative and political capital of Cameroon since 1922. After Douala, which is considered as the economical capital, Yaoundé constitutes the second biggest city of Cameroon, and is the county town of Mfoundi Department and of Centre Province. Historically, Yaoundé is composed by four districts. Yaoundé 1 st , 490 000 inhabitants in 2001, is in the north of Yaoundé. That is the headquarters of the Presidency of the Republic and of the province. It is composed by both popular areas (Etoudi, Nlongkak, Mvog-Ada, Essos) in the north and residential area (Bastos) in the South. Yaoundé 2 nd , 500 000 inhabitants in 2001, is located at the West part of Yaoundé. In the North, Tsinga and Mont-Fébé are residential areas, but the main part of population live in very popular areas (Mokolo, Briqueterie, Melen, Nkomkana). Yaoundé 3 rd , 172 000 inhabitants in 2001, is actually the "old Yaoundé". Located in the centre and South-West of the city, it was the headquarters of German and French authorities. It now houses all public administrations and concentrates major part of shops. Downtown is mainly constituted by buildings and residential areas, whereas the South-West concentrates a large part of population in popular areas (Mvolyé, Efoulan). Yaoundé 4 th , 344 000 inhabitants in 2001, is located in the Eastern and South-Eastern part of the capital. There are there several popular areas (Nsam, Mvog-Mbi, Nkoldongo, Kodengui), the airport and several agro-industry head offices. Since 2007, Yaoundé is cut into seven districts. Yaoundé 5 th , 6 th and 7 th respectively come from the reorganisation of Youndé 2 nd , 4 th and 1 st .

Figure 2

 2 Figure 2 presents consumers' preferences relative to types of chicken, out of price matter, and the types of chicken actually bought by households from Port-au-Prince and Yaoundé.

Figure 2 .

 2 Figure 2. Preferences versus actually chicken bought (% of households, 180 households)

Figures 4

 4 Figures 4 and 5 present the evolution of chicken consumption habits households have declared in Yaoundé (figure4) and Port-au-Prince (figure5).

Figure 4 .

 4 Figure 4. Evolution of chicken consumption in the five last years in Yaoundé

Figure 5 .

 5 Figure 5. Evolution of chicken consumption in the five last years in Port-au-Prince a-Type of evolution declared b-Nature of substitution

  figure 5b: rustic and local flesh chicken has massively been replaced by imported chicken cuts. There has been little substitution between rustic and local flesh chicken.

  average households consumers reserve prices for each type of chicken. In coherence with common use, prices for imported frozen cuts are given in kilograms, and those for rustic and flesh chicken are given for a whole chicken (we therefore don't know exactly their weight). Prices are given in local currencies: Franc CFA in Yaoundé, Gourdes in Port-au-Prince, and converted in US $, 2005.

Figure 6

 6 Figure 6 brings to the fore the influence of household localisation (quarters in Yaoundé, communes in Port-au-Prince) on willingness to pay the chicken.

Figure 6 .

 6 Figure 6. Influence of household's locality on average reserve price for chicken

Figure 7 .

 7 Figure 7. Position and contribution of significant explicative variable in LevLife, Status and Elab -Yaoundé

Figure

  Figure 8. Position and contribution of significant explicative variable in LevLife, Status and

  present results of estimation for the probability to consume rustic or local or imported chicken with a logit model. Coefficient have been estimated with those associated to the rustic one normalized to zero.

Table 1 : Economic reference data about Cameroon and Haiti

 1

	Cameroon	Haiti

Table 2 .

 2 Reserve prices for each type of chicken as presented on urban markets

	Average reserve prices

Table 5 .

 5 Available explicative variables relative to households' socio-economic status

	Study level of people answering
	Stud	No: No scolar education, Prim: Primary education, Sec:	No, Prim, Sec, Univ
		Secondary education, Univ: Higher education
	Major professional activity of people answering
	Prof	Unemp: unemployed, Inf: Activities relative to informal	Unemp, Inf, Com, SF
		sector, Com: Tradesman, SF: Employee or civil servant

Table 6 .

 6 Available explicative variables relative to households' features of chicken consumption

	Type of cooking (for Yaoundé : only for festive meals) -Several answers possible
	Sau	Chicken sauce (casserole or called "braisé" at Yaoundé)	0/1
	Fum	Fumed (called "boucané" at Port-au-Prince)	0/1
	Fri	Fried	0/1
	Roa	Roast (in a cooker or roaster) (for Yaoundé only)	0/1
	Gri	Grilled (barbecue) (for Yaoundé only)	0/1
	Cut or not cut before cooked? (for Port-au-Prince only)
	C	Cooked after being cut (associated to Sau, Fum or Fri)	0/1
	W	Cooked as a whole (associated to Sau, Fum or Fri)	0/1
	I	Indifferent (associated to Sau, Fum or Fri)	0/1

Table 7 .

 7 Other available variables relative to households

	Nb	Number of people composing the household	value
	Age	Age of people answering	value
	Type of household
		HC: Men centred, FC: Woman centred, N: Nuclear	HC, FC, N
	Usual chicken buying place
	Mk	Traditional urban market	0/1
	Road	Seller on the road	0/1
	Smk	Supermarket	0/1
	Farm	Farm (for Yaoundé only)	0/1
	Pmk	Peri urban market (for Yaoundé only)	0/1

  8. Position and contribution of significant explicative variable in LevLife, Status and Status and Elab now may be used as continue variables in Logit model.

		24%
		-1.32
	28%		10%				16%	11%
	-2.06		-0.46	0	0.74	0.93	Levlife
	Elec0		Wat0		Wat1	Y3	17.81%
		Y1
	17%
	-1.30	7%	9%					29%	32%
		-0.82	-0.57		0			1.27	1.42
	LevLife,							Status
	Pri	Com	Inf					Univ	SF	23.54%
	m
		11%
		-0.53
			2%		19%	14%	26%	24%
			-0.20	0	0.92	2.17	2.26	4.87
								Elab
		Roa0		Roa1	Gri1	Fum1	32.88%
			Fri1				Fri0
	Elab -Port-au-Prince
	-1.64 30%		-0.71 19%	-0.52 5%	0	0.34 6%	0.93 25%	2.07 13%
								Levlife
	Elec0			Del			Wat1	PV	30.33%
			Wat0				Elec1

Table 8 .

 8 Yaoundé -Determinants of effective household's consumption (first choice)

	8a) local chicken (compared to rustic one)
	Parameter	Estimate (t-statistics)
	C ***	+ 3.13 (4.17)
	Nb**	-0.16 (-2.14)

Table 9 .

 9 Yaoundé -Determinants of effective household's consumption at festive meals (first choice)

	Imported chicken (compared to local flesh one) 8
	Parameter	Estimate (t-statistics)
	C	+ 0.32 (+ 0.72)
	Nb *	-0.09 (-1.66)
	LevLife	-0.22 (-1.30)
	Status	-0.14 (-0.84)
	Elab **	-0.40 (-2.07)
	FC	-0.52 (-1.44)
	N *	-1.16 (-1.80)
	Number of observations: 180 ; 2 MacFadden 1	= 0.062 ; LR (zero slopes)= 11.44 [0.076]
	*, **, *** indicate statistical significance respectively at 10%, 5%, 1% level
	Results of are quite similar for usual (table 8) and festive meals (table

Table 10 .

 10 Yaoundé -Determinants of household's consumption of imported chicken (as first, second or third choice)

	Parameter

Table 11 .

 11 Port-au-Prince -Determinants of effective household's consumption

	11a) local chicken (compared to rustic one)
	Parameter	Estimate (t-statistics)
	C	-1.32 (-1.16)
	Age **	+ 0.48 (+ 2.15)
	Nb	-0.08 (-0.73)
	LevLife	-0.34 (-1.45)
	Status *	+ 0.42 (+ 1.71)
	Elab	+ 0.04 (+ 1.05)
	FC	-0.47 (-1.00)
	N	-1.08 (-1.37)
	11b) imported chicken (compared to rustic one)
	C	+ 0.28 (+ 0.78)
	Age	+ 0.02 (+ 1.07)
	Nb	-0.07 (-0.67)
	LevLife ***	-0.73 (-3.36)
	Status	-0.07 (-0.32)
	Elab **	-0.49 (-2.29)
	FC	-0.52 (-1.27)

Table 12 .

 12 Port-au-Prince -Determinants of household's consumption of imported chicken (as first, second or third choice)

	Parameter

Table 13 .

 13 Yaoundé -Reserve prices

	Local chicken
	Parameter	Estimate (t-statistics)
	C ***	+ 3535.21 (+ 16.85)
	Nb	-15.05	(-0.65)
	LevLife	-8.60	(-0.11)
	Status ***	-200.91	(-2.70)
	Elab *	-150.05	(-1.69)
	FC	-120.84	(-0.71)
	N	-339.52	(-1.11)
	Shop	-122.49	(-0.78)
	Smk	+ 256.87	(+ 0.60)
	Periurb *	-328.55	(-1.60)
	Farm *	+ 366.60	(+ 1.81)
	Number of observations: 155 ; ² R = 0.116 ; F (zero slopes)= 1.90 [0.049]
	*, **, *** indicate statistical significance respectively at 10%, 5%, 1% level
	Imported chicken
	Parameter	Estimate (t-statistics)
	C ***	+ 1394.63 (+ 59.52)
	Nb *	-4.91	(-1.85)
	LevLife	-8.74	(-1.00)
	Status	-13.61	(-1.43)
	Elab ***	-32.90	(-4.98)
	FC	-5.19	(-0.27)
	N	-28.51	(-0.65)
	Shop	+ 26.58	(+ 1.39)
	Smk	-7.23	(-0.13)
	Periurb	-22.88	(-0.66)
	Farm	+ 25.13	(+ 0.94)
	Number of observations: 142 ; ² R = 0.135 ; F (zero slopes)= 2.05 [0.033]
	*, **, *** indicate statistical significance respectively at 10%, 5%, 1% level

Table 13 .

 13 Port-au-Prince -Reserve prices

	Rustic chicken
	Parameter	Estimate (t-statistics)
	C ***	+ 359.22 (+ 9.64)
	Nb	+ 0.64	(+ 0.11)

which value added and phytosanitary taxes add to(17,5 % and 3 % respectively)

The figure of 110 000 rural jobs lost in poultry Cameroon industry, due to import surges, has been given byAcdic (2005) and has been also used byFAO (2006).

see Association civile de défense des intérêts des consommateurs (Acdic), 2005; Chambre de commerce, d'industrie, des mines et de l'artisanat (Ccima), 2005; FAO, 2006 for Cameroon ; Christian Aid, 2006 for Haïti.

Besides, both countries have not been concerned by the avian pest during the period of study.

Data used in this article have been collected by Cyprien Awono B., in the frame of his PhD studies (Awono[START_REF] Bessa | Les déterminants micro-économiques de la consommation urbaine de poulets de chair dans les pays du Sud : Cas du Cameroun et d'Haïti[END_REF].

Note that Haitian survey has been made in a very difficult context of urban violence and high level of insecurity: the respects of statistic quotas of polled people actually constituted a real challenge.

Explicative variables about households and consumers level of life or consumption habits are numerous and essentially qualitative; that leads to problems of multi-co linearity in econometrical regressions. To deal with, we combine, in this article, models of regression with statistical analysis of multiple correspondences (AMC). Such a combination has been successfully implemented in comparable cases where numerous qualitative variables are used to build, using AMC, new synthetic continue variables, that can be used in econometric regressions in a Logit model. For an explanation of the method, see for example [START_REF] Ducos | Agri-environment contract adoption under fixed and variable costs[END_REF] p.679, in the case of identifying the determinants of adopting agro-environmental practices.

In our article, AMC has been implemented to three disjointed groups of qualitative variablesa first group dealing with conditions of life of households (table 4), a second group dealing with socio-economic status of households (table 5), a third one dealing with households' chicken consumption habits (table 6), in order to build three corresponding synthesis variables. Table 7 presents other available variables used in further regressions. In Port-au-Prince the sign of the impact of LevLife on chicken (rustic or imported) reserve price is positive. This result is consistent with the assumption chicken is a superior good in Haiti. Note that LevLife is only significant for rustic chicken's reserve price. Compared to traditional markets, road sellers seem to offer better prices for rustic chicken. Elab has significant positive impact on imported chicken as if households who usually cook elaborated whole chicken over-evaluate the price of imported chicken cuts.

In Port-au-Prince or in Yaoundé, the goodness of fit is rather bad. Indeed, the R² is always less than 0.20. Other functional forms have been tested for estimation, as log linear and semi-log.

But these new specifications did not improve the goodness of fit. The main problem is that important explanatory variables were omitted because not collected.

Conclusion

Chicken cheap imports have been denounced by several non governmental organisations and associations, because it caused the collapse of many poultry husbandry and the loss of jobs in the local food chain. They notably recommend reinstituting high level of border tariff protection against imports of chicken pieces. Those organizations often argue that the liberalisation of chicken market is an emblematic example of the negative effects of trade liberalisation for developing countries due to international trade agreements.


Angela Cheptea
email: angela.cheptea@rennes.inra.fr

Alexandre Gohin

Marilyne Huchet Bourdon

Applying the gravity approach to sector trade: Who bears the trade costs?

Keywords: gravity, trade, econometric simulation JEL classifications: F11, F12, C13, C15 gravité, commerce, simulation économétrique Classifications JEL : F11, F12, C13, C15

 approaches. We estimate trade flows and prices simultaneously with non linear techniques. Underestimated expenditure levels yield biased values of model parameters.

Introduction

The gravity equation is one of the greater success stories in empirical economics. In its simplest version, this equation relates bilateral trade flows to the Gross Domestic Products (GDP) of trade partners, the distance separating them, and other factors that portray trade barriers. It has been widely used at the aggregate level or at the product line level for policy analysis, especially to investigate the effects of trading blocks and trade liberalization agreements on bilateral trade. It is also used to identify non tariff trade costs (Anderson and van Wincoop -henceforth AvW, 2004). Despite its empirical success, the gravity approach used to have a poor reputation with the often-asserted lack of theoretical foundations and consequently the inability to interpret results [START_REF] Baier | The growth of world trade: tariffs, transport costs, and income similarity[END_REF]. Moreover, the fact that it performs well in all cases (trade of homogeneous and differentiated products, trade between developed and developing countries) seems puzzling; this again raises the question of the underlying theoretical foundations (Hummels and Levinshon, 1995).

In order to take advantage of these empirical results, some efforts were conducted to show that the basic gravity equation can be derived theoretically as a reduced form from the two dominant paradigms of international trade in final goods, namely from the nationallydifferentiated goods perfectly competitive model (often attributed to [START_REF] Armington | A theory of demand for products distinguished by place of production[END_REF] and referred to as the old trade theory) and from the firm-differentiated goods monopolistically competitive model with increasing-returns-to-scale technologies (often attributed to [START_REF] Helpman | Market structure and foreign trade: increasing returns, imperfect competition and the international trade[END_REF] -henceforth HK-and referred to as the new trade theory). However, disentangling the relevant paradigm is critical for policy analysis because the distribution of the benefits of trade liberalization is completely far apart [START_REF] Head | Increasing returns versus national product differentiation as an explanation for the pattern of U.S.-Canada trade[END_REF]. Moreover, AvW (2003) on the old trade theory and [START_REF] Bergstrand | The generalized gravity equation, monopolistic competition and the factor proportions theory in international trade[END_REF][START_REF] Bergstrand | The Heckscher-Ohlin-Samuelson model, the Linder hypothesis and the determinants of bilateral intra-industry trade[END_REF] on the new trade theory show that appropriate price indexes must be specified in the gravity model in order to generate interpretable results. Present efforts are mainly directed to the inclusion of the highly non-linear multilateral price indexes in econometric estimations. Unfortunately the expressions of the multilateral price indexes depend on the underlying theory, hence limiting the usefulness of econometric results from basic gravity models.

In this already challenging context for the basic gravity approach, the purpose of the present paper is to examine two potential issues when it is used for sector trade analysis. The first issue (all trade costs are not incurred at the sector level) is theoretical and applies only when the Armington trade theory is adopted (which is often the case in practice). The second issue (mis-measurement of sector expenditure) is empirical and relevant to both trade theories.

Let's start with the first issue. The Armington gravity approach implicitly assumes that trade costs are supported by the sector producers in the exporting countries (see page 174 and footnote 9 in AvW, 2003). This assumption contradicts the fact that in reality some trade costs are not borne by them. We have in mind two kinds of trade costs. Firstly, international transport costs are not reported in the sector GDP of the exporter, while they are a non negligible part of the total costs faced by consumers in the importing country. For instance, [START_REF] Bergstrand | Gravity Redux: structural estimation of gravity equations with asymmetric bilateral trade costs[END_REF] reveal that these international transport costs (computed as the difference between cif and fob values of trade) represent nearly 20% of the cif value of trade in 2003. Secondly, policy tariffs are obviously not collected by sector producers in the exporting country while they are quite significant in some sectors. AvW (2004) report that average tariffs are low among most developed countries (under 5%) but much higher in other countries (between 10% and 20%). Furthermore, they mention that the variation of tariffs across goods is quite large in all countries, with tariffs on agricultural and food products higher than those on industrial products. A crude approximation suggests that 30% of the trade costs supported by consumers in the importing countries are not incurred by sector producers in the exporting countries. This fact implies that sector expenditures cannot be theoretically equal to sector revenues while this assumption is maintained in the Armington gravity approach. 1 In the first part of the paper we formally show that the theoretically founded Armington gravity approach is unfeasible at a sector level. We then propose a slight modification to solve this issue by assuming that productions by sector are fixed in volume terms rather than in value terms.

The second issue is empirical and applies to our modified version of Armington gravity as well as to the HK gravity version. It refers to the mis-measurement of importers' expenditures in the empirical applications of the gravity. As underlined above, the value of all trade costs must be acknowledged in importers' expenditures. Unfortunately these expenditures are most often (if not always) computed as the sum of production and imports, less exports (e.g., [START_REF] Head | Increasing returns versus national product differentiation as an explanation for the pattern of U.S.-Canada trade[END_REF]. Such a computation does not include in particular import tariffs paid by importers. If the fob value of imports is used, this computation also omits international 1 On the other hand, under the assumption of balanced trade, expenditures and GDP are equal at the aggregate level and this approach is then theoretically founded. transport costs. In this case one ends up estimating a trade equation system without the right measure of the expenditure explanatory variable. 2 We thus have a measurement error issue (under-estimation of sector expenditures) which is a source of econometric endogeneity (Wooldridge, 2002, pp. 50-51). The literature on econometric theory in general and on international trade in particular already points out several cases where the endogeneity of regressors severely influences results (see, for instance, Egger, 2004 or Baier andBersgtrand, 2007). Current practice of using panel data econometrics with the specification of fixed effects is far from ideal but the only available second best solution. Moreover, AvW (2003, p.180) emphasize that the fixed effects estimator is less efficient than the nonlinear least squares estimator which uses the entire information on the full structure of the model. They further add that the simple fixed effects estimator is not necessarily more robust to a specification error. Finally, under this approach the effect of trade liberalization on the price index is not acknowledged, which is at odds with the initial objective of identifying trade determinants. Our second objective in this paper is to illustrate how significant is this empirical issue. We do so using Monte Carlo techniques similar to [START_REF] Bergstrand | Gravity Redux: structural estimation of gravity equations with asymmetric bilateral trade costs[END_REF].

We first simulate trade flows given the level of exogenous variables and behavioural parameters, and then estimate the model with the correct and mis-measured expenditures. The procedure is conducted for both theoretical versions of gravity (our modified Armington gravity and the HK version). The mis-measurement of sector expenditures significantly impacts the estimated behavioural parameters in both approaches. Our findings also suggest that theory must be taken seriously in empirical studies: prices should be estimated simultaneously which is seldom the case. Finally, fixed-effects estimations give unbiased estimates, but they do not provide information about the trade theory behind.

The core of this paper is organised in three main sections. The following section is devoted to the Armington gravity approach. We first formally demonstrate that the AvW equations pertaining to the old trade theory cannot be simply applied to sector-level studies. Then we propose a modified version of the AvW model which solves this unfeasibility and move on the Monte Carlo analysis to reveal the econometric bias. Section 3 is devoted to the HK gravity approach. We first explain why the approach is readily convenient for sector level studies and then again move on the illustrative econometric analysis. In section 4 we present results from the prominent fixed effect econometric approach. Finally section 5 concludes.

The Armington gravity approach to sector trade

The basic Armington gravity approach

This approach is nicely explained in AvW (2003AvW ( , 2004) ) and therefore we present it very briefly below. It is grounded on three main hypotheses. Firstly, bilateral trade is determined in a conditional general equilibrium in the sense that the values of production and demand of country i for product class k ( ) are assumed exogenous. Secondly, the preferences of the consumers are identical across countries and are of the Constant Elasticity of Substitution (CES) type. Thirdly, trade costs can be captured by ad valorem tax equivalents and are exogenous, i.e., they do not depend of the volume of trade. Formally, the utility function of the representative consumer in the importing country j is given by:

k i k i E Y , (
)

1 1 1 / - = - ⎟ ⎠ ⎞ ⎜ ⎝ ⎛ = ∑ σ σ σ σ β N i k i k ij k j x U (1)
where denotes exports from i to j of product k, k ij

x σ is the elasticity of substitution, is the number of countries and is a positive distribution parameter reflecting the preference for the goods produced in this country. The representative consumer in country j maximizes his utility subject to the budget constraint:

N k i β (2) ∑ = = N i k ij k ij k j x p E 1 where
is the price faced by the consumer for the product k from country i. It differs from producer's supply price due to trade costs. Indeed, the third assumption implies:

k ij p k i p (3) k ij k i k ij t p p =
where is the ad valorem tax equivalent of trade costs. Solving the consumer program we obtain:

1 - k ij t N j i E P t p X x t p x p k j k j k ij k i k i k ij k ij k ij k i k ij k ij , 1 , 1 = ∀ ⎟ ⎟ ⎠ ⎞ ⎜ ⎜ ⎝ ⎛ = = = -σ β (4)
with the CES price index:

( )

N j i t p P N i k ij k i k i k j , 1 , 1 1 1 1 = ∀ ⎟ ⎠ ⎞ ⎜ ⎝ ⎛ = - = - ∑ σ σ β (5) k ij
X stands for the value of exports of country i as paid by consumers in country j.

In order to get a gravity type equation from this demand system, the trick is to solve for producer prices by imposing market-clearing conditions in value terms for all i:

(6) N i X Y N j k ij k i , 1 1 = ∀ = ∑ =
From these equilibrium conditions, we get an implicit solution for the producer price and the distribution parameter:

N i E P t Y p N j k j k j k ij k i k i k i , 1 1 1 1 1 1 = ∀ ⎟ ⎟ ⎟ ⎠ ⎞ ⎜ ⎜ ⎜ ⎝ ⎛ ⎟ ⎟ ⎠ ⎞ ⎜ ⎜ ⎝ ⎛ ⎟ ⎟ ⎠ ⎞ ⎜ ⎜ ⎝ ⎛ = - - = - ∑ σ σ β (7)
Substituting this expression in the above demand equation ( 4) yields the gravity equation with two price indexes:

N j i E Y P t X k j k i k i k j k ij k ij , 1 , 1 = ∀ ⎟ ⎟ ⎠ ⎞ ⎜ ⎜ ⎝ ⎛ Π = -σ (8) with N i E P t N j k j k j k ij k i , 1 1 1 1 1 = ∀ ⎟ ⎟ ⎠ ⎞ ⎜ ⎜ ⎝ ⎛ ⎟ ⎟ ⎠ ⎞ ⎜ ⎜ ⎝ ⎛ = Π - = - ∑ σ σ (9) and N j Y t P N i k i k i k ij k j , 1 1 1 1 1 = ∀ ⎟ ⎟ ⎠ ⎞ ⎜ ⎜ ⎝ ⎛ ⎟ ⎟ ⎠ ⎞ ⎜ ⎜ ⎝ ⎛ Π = - = - ∑ σ σ (10)
In fact, in the equation system ( 8)-( 10), the values of total supply and total demand, as well as trade costs are predetermined variables, while bilateral trade and producer price are endogenous. The latter ensures the equilibrium on the goods market.

A modified Armington gravity approach for sector-level trade

The framework presented in the previous subsection assumes indeed that all trade costs are incurred by the exporter, and then passed onto the importer. This is reflected by equation ( 6) which states that the value of domestic production is equal to the sum of all demands expressed in consumer values. This implies that sector producers in the exporting country support the import tariffs, which is obviously not the case in real life, as well as other international trade costs (think about the use of the services of a foreign transport firm).

Another way to see that this framework cannot be adapted to sector trade is to acknowledge, contrary to AvW (2004)'s statement, that many production and expenditure models do not lie behind the set { }

k j k i E Y ,
that verifies equations ( 8)-( 10). World sector-level production and consumption values consistent with ( 8)-( 10) also verify:

(11)

∑ ∑∑ ∑∑ ∑ = = = = = = = = = = = N j k k j N j N i k ij N i N j k ij N i k i k E E X X Y Y 1 1 1 1 1 1
Accordingly, the three assumptions necessarily imply that world production is equal to world expenditure and one must relax at least one of these assumptions to allow them to be different as observed in reality. We suggest to assume that the volume of production (denoted by ), but not its value, is fixed (exogenous). Thus, we keep the initial spirit of a conditional general equilibrium advanced by AvW (2004). But this time, the market-clearing conditions are expressed in quantities:

k i k i k i p Y y / = (6') ∑ = = ∀ = N j k ij k ij k i N j p X y 1 , 1 /
We multiply both sides of the above expression by k i p and use equations ( 3) and (4) to obtain:

(6'')

The sec in section 2.1. (equation ( 9)). We denote it by

( ) ( ) ( ) ∑ - - - = ∀ = N k j k j k ij k i k i k i N j E P t p Y 1 1 , 1 σ σ σ β = j 1
ond part of the right hand expression of (6'') is very similar to the exporter price index

( ) σ - Π 1 k i ( ) σ - Π 1 ~k i
and derive the producer price:

( ) ( ) 1 1 ~- - Π = σ σ β k k k k i i i i Y p (7')
The consumers' demand (in cif terms) is then obtained by combining equations ( 4) and (7'):

N j i Y E P t X k i k j k i k j k ij k ij , 1 , ~1 = ∀ ⎟ ⎟ ⎠ ⎞ ⎜ ⎜ ⎝ ⎛ Π = -σ (8') with ( ) ( ) N i p Y k i k i k i k i , 1 ~1 1 1
quite close to the AvW original model (import demand can still be expressed with two price indexes). Note, that according to our notations the exporter price index can still be written as:

= ∀ = Π - -β σ (9')
This new theoretically grounded gravity version -given by equations ( 5), (8'), and (9')-can be applied to sector trade and is ( ) ( )

N i E P t j j ij i , 1 1 = ∀ ⎟ ⎠ ⎜ ⎜ ⎝ = Π = ∑ (9'')
Following AvW (2003AvW ( , 2004)) Trade costs are seldom observed in real life. Instead, they are mo geographical distance and other bilateral variables. We assume

, one can interpret k Π N k j k k k ~1 1 1 ⎟ ⎞ ⎛ - - - σ σ σ i ~ from
( ) δ k k = with k observable variables.
For simplicity, we refer to k as distance, although it may include as well import

ij ij d t ij d ij d
tariffs, norms, standards, and other elements. The gravity model given by equations ( 5), (8'), and (9') can then be rewritten as:

( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) σ σ σ δ σ σ σ σ σ δ β β - - = - - - - - - = Π = Π = ∑ 1 1 1 1 1 1 1 1 1 ~k i k i k i k i N i k ij k i k i k j k i k j k i k j k ij k ij p Y d p P P Y E d X N j i , 1 , = ∀ (12)

Mis-measurement of final expenditures

Implementing the Armington gravity approach presumes that one is able to accurately observe, for each sector and country included in the study, the cif values of trade, trade costs, production (value) and expenditures. If production values are rather easily accessible, other data are much more critical to gather (AvW, 2004). In particular, to our knowledge, sectorlevel expenditures are always computed as residuals. In theory, a country's expenditure should equal the country's production value less the fob value of its exports plus the cif value of its imports and tariffs. Due to quality problems, concordance between product nomenclature, consistency between fob and cif values, difficulties to collect tariffs over several partners/years, one understandable solution may be to simply compute the expenditure as the sum of productio exports, and omit tariffs (e.g., n and fob imports less the value of fob [START_REF] Head | Increasing returns versus national product differentiation as an explanation for the pattern of U.S.-Canada trade[END_REF]:

( ) ∑ ∑ - - = = ′ i ij ij ij j i ij ij j
simply replace it by the importer's production value (e.g., Feenstra et al., 2001):

E k k k k k k k t t X E t X E 1 .
A more radical solution is to heir production volumes and expenditures, distances, C S behavioural parameters, and delta:

k j k j Y = ″ .
This is typically an empirical issue that we investigate with a Monte Carlo analysis.

In this sub-section, we use our modified Armington gravity specification developed for sector trade. The analysis consists of two steps. In the first step, we generate some data satisfying our trade model. We consider a set of thirty countries and fix the levels of t

E 30 , , 1 , 30 , , 1 , 30 K = = = j i N K 1 , 5 , 1 = = ∀ = δ σ β i k i ( ) ( ) ( ) 1 , 1 . 0 , 3 . 0 1 , 10 , 100 , 10 , 100 = ≈ - ≈ ≈ ij k i k j N d N y N E
Note, that we do not impose symmetrical trade costs: for the parameter δ at its true value. We replicate the above steps a hundred times and obtain one hundred data sets and estimation results.

Table 1 displays the mean values of the estimated parameters, the associated standard errors, and the 95% confidence intervals. We employ three measures of importers' expenditures: (i) true generated values, (ii) true values less simulated trade costs, and (iii) production values.

Note that the second measure corresponds roughly to the computation of sector expenditures as domestic production plus fob imports less fob exports. When all the constraints of the theoretical model are fulfilled, and producer prices are considered exogenous (as in most empirical applications), the substitution elasticity σ is the only estimated parameter. We first use the simulated value of prices and present estimation results in the first three rows of Tab 1. In this case the mis-measurement of expenditures in the numerator of the trade equation leads to an overestimation of the elasticity of substitution. When we estimate both le σ and p equation system (12) (the next three rows of Table 1), we obtain a very similar bias.

Except for the case when sector expenditures are correctly measured, the true value of

k i in the σ ( ) 5 = σ
is never even included in the confidence interval. This result emphasizes the importance of using correct expenditure values when estimating a AvW gravity model.

Empirical studies rarely impose a unitary elasticity of trade with respect to production and expenditure, as implied by the theoretical model. When we relax this assumption (the last six rows of Table 1), the estimation bias of the substitution elastic ue to the use of wrong expenditure values vanishes. The estimated value of the substitution elasticity is not statistically different from the value used to construct the data ( Note: * number of cases out of 100 for which the true value of the estimated coefficient (5 for the elasticity of substitution and 1 for the coefficients on Y i and E j ) belongs to the estimated 95% confidence interval.

The Helpman-Krugman gravity approach to sector trade

The theory

A gravity equation can also be theoretically derived from the firm-differentiated-goods monopolistically-competitive model with increasing-returns-to-scale technologies [START_REF] Krugman | Scale economies, product differentiation, and the pattern of trade[END_REF], HK, 1985). Below we present this model at the sector level and show that, contrary to the Armington gravity model, it does not assume that trade costs are necessarily borne by the producer.

This approach shares many assumptions with the Armington model of trade: preferences are identical across countries and of CES form, trade costs can be captured through ad valorem equivalents, and expenditures are exogenous. The main differences lie in the supply side: the number of goods/firms in countries is endogenous and the supply of each good is determined by the profit maximisation subject to increasing-returns-to-scale technologies. Because the number of goods is endogenous, the utility of consumers has not exactly the same expression as before:

1 1 1 - = - ⎟ ⎠ ⎞ ⎜ ⎝ ⎛ = ∑ σ σ σ σ N i k ij k i k j x n U (13)
where is the number of symmetric firms producing the good k in country i and is the quantity of each variety of good k produced in i and consumed in country j. 3)), the budget constraint is now given by: ( 14)

∑ = N i k ij k ij k i k i k j x t p n E
The resulting demand equations are then:

N j i E P t p n X x t p n k j k j k ij k i k i k ij k ij k ij k j k i , 1 , 1 = ∀ ⎟ ⎟ ⎠ ⎞ ⎜ ⎜ ⎝ ⎛ = = -σ (15)
with the CES price indices:

( )

N j t p n P N i k ij k i k i k j , 1 1 1 1 1 = ∀ ⎟ ⎟ ⎠ ⎞ ⎜ ⎝ ⎛ = - = - ∑ σ σ (16) k ij k i x
4 Hence, the total export of good k varieties by i to j in volume terms is equal to n . On the supply side, a monopolistically competitive framework with symmetric firms using the same increasing-returns production technology is assumed. This representative firm maximizes profits subject to the workhorse linear technology function defined on a single input variable:

N i y l k i k k k i , 1 = ∀ + = ϕ α ( 17
)
where represents the labour used by the representative firm in country i, is the firm output (in volume terms), and and are technological parameters (corresponding respectively to fixed and marginal costs expressed in terms of labour units). The assumption of monopolistic competition permits to write the price equation as a mark-up over the marginal cost of production (determined by wages ):

k i l k i y k α k ϕ k i w N i w p k i k k i , 1 1 = ∀ - = ϕ σ σ (18)
Free entry leads to zero economic profits at the equilibrium. The level of production is the same for all firms within the sector and given by: ( )

N i q y k k k i , 1 1 = ∀ = - = σ ϕ α (19)
Confronting the demand of labour by firms with the total labour endowment within the sector then determines the number of firms at equilibrium:

k i L ( ) N i q w Y q L l L n k k k i k i k k k i k i k i k i , 1 = ∀ + = + = = ϕ α ϕ α (20)
Substituting the above expression in the demand equation ( 15) and using equation ( 18) for yields the gravity equation:

k i p N j i Y t p E Y t p X l k l k lj k l k j k i k ij k i k ij , 1 , 1 1 = ∀ = ∑ - - - - σ σ σ σ (21)
Traditional gravity explanatory variables appear in the right hand side of equation ( 21). In this framework both producer prices and the value of sector productions are endogenous. Note, that the above trade equation can also be written in terms of exporting country's wages and factor (labour) endowments using expressions ( 18) and ( 20) respectively. Production prices (wages) are implicitly determined by the market equilibrium conditions:

∑ = j k ij k i k i k i k i x n p q n p or N j i y t p E y t p t X Y j l k l k lj k l k j k i k ij k i j k ij k ij k i , 1 , 1 1 = ∀ = = ∑ ∑ ∑ - - - - σ σ σ σ (22)
By fixing the level of the production factor, , the HK version of gravity can be readily applied to sector-level trade. Note that in both HK and modified Armington (AvW) models, the sector expenditure appears only in the numerator of the trade equation. However, in the HK model, prices (wages), as established by the goods market equilibrium conditions ( 22), are also a function of expenditure values.

k i L
As in the previous model, we can express trade costs as a function of the bilateral distance

. The HK gravity model then rewrites as:

δ k ij k ij d t = ( ) ( ) ( ) ( ) ∑ ∑
= = ∀ = = - - - - - - j k ij k ij k i i k i k ij k i k j k j k j k i k ij k i k ij d X Y N j i Y d p P P E Y d p X δ σ δ σ σ σ σ δ σ , 1 , 1 1 1 1 (23)
We now turn again to the empirical issue of (in)correctly measured expenditures.

The Monte Carlo analysis

As previously, we use Monte Carlo techniques to check if the correct measurement of sector expenditures is critical for obtaining unbiased estimators of the parameters. First, we construct a hundred data sets satisfying the following assumptions:

30 = N 1 , 5 , 1 = = = = δ σ ϕ α k k ( ) ( ) ( ) 1 , 1 . 0 , 3 . 0 1 , 10 , 100 , 10 , 100 = ≈ - ≈ ≈ k ii k ij k i k j d N d N L N E
Like [START_REF] Bergstrand | Gravity Redux: structural estimation of gravity equations with asymmetric bilateral trade costs[END_REF], we simplify the supply side by normalising the technological parameters. The other exogenous parameters are identical to the ones adopted in section 2.3. We solve the system ( 23 Estimation results are reported in Table 2 below. Results in the upper part of the table correspond to the case when all the theoretical constraints of the model are imposed and producer prices are considered as exogenous and fixed to their simulated values. The estimated elasticity of substitution is unbiased only when the correct expenditures are employed. In the next three rows, producer prices are endogenous and estimated by the model. Again, the use of incorrect measures of sector expenditures produces an overestimation bias. In both cases one can correctly estimate the elasticity of substitution only by using the true value of sector-level expenditure. If the trade-cost-free expenditure or production is employed instead, the confidence interval of the estimated parameter does not include the true value of the elasticity of substitution. The last set of results displayed in Table 2 shows that relaxing the constraint of unitary coefficients on production and expenditure variables always yields an unbiased estimator of the substitution elasticity.

However, this is achieved to the detriment of the precision of other structural parameters. As in the case of the AvW model in section 2.3., a change in the value of expenditure and production coefficients permits to compensate for the difference between true sector-level expenditures and alternative variables (the correlation between estimated and true prices is shown in Tables A3 andA4 of Appendix A.).

Working Paper SMART -LERECO N°11-01 Note: * number of cases out of 100 for which the true value of the estimated coefficient (5 for the elasticity of substitution, 1 for the coefficient on Y i , and 1 for the coefficient on E j ) belongs to the estimated 95% confidence interval.

Alternative estimation methods

As shown in sections 2.3. and 3.2., we are always able to recover the true value of parameters using the correct measure of expenditures. When we undervalue the level of sector expenditures (by ignoring a large share of trade costs paid by consumers in the importing country) and estimate the model with all theoretical constraints, we obtain upward biased values of the elasticity of substitution. Still, relaxing the assumption of unitary coefficients on and emerges as a solution to the unavailability of data on true sector-level expenditures for both AvW and HK gravity versions. But this holds only for sufficiently low values of trade costs and requires that the entire trade system (12), respectively ( 23), be estimated with non linear techniques. Estimation results in Tables 1 and2 suggest that theory must be taken seriously in empirical studies: producer prices (wages) and price indices should be estimated simultaneously with trade flows and not taken from outside (as, for instance, in [START_REF] Balistreri | Structural estimation and the border puzzle[END_REF] or be captured by country dummies alone (e.g., [START_REF] Baldwin | Trade effects of the Euro: a comparison of estimators[END_REF]. This is seldom the case in empirical studies, most of which reduce to estimating the corresponding trade equation alone and ignore the price/wage endogeneity.

k j E k i Y 5
Recent empirical works employing the AvW model increasingly implement a fixed-effects estimator. Rather than estimating the entire equation system (12) with non linear techniques, this approach, suggested by AvW themselves, consists in estimating the trade equation alone with importer and exporter fixed effects:

( ) N j i FE FM d X k i k j ij k ij , 1 , 1 = ∀ = -σ δ (24)
with and

( ) k j k j k j E P FM 1 - = σ ( ) k i k i k i Y FE 1 ~- Π = σ
. By estimating equation ( 24) authors intended to avoid the estimation of non linear price indexes in the AvW version of gravity. This method permits at the same time to solve the problem of mis-measuring (missing) sector/product level productions and/or expenditures. Note that this approach can be applied as well to HK-type gravity models. In this case country fixed effects stand for and , where is defined by equation ( 16). Table 3 below displays the estimation results for both models (means of values across the one hundred simulated data sets). For both [START_REF] Harrigan | Openness to trade in manufactures in the OECD[END_REF], address the issue of endogenous wages in a HK trade model with Instrumental Variables estimators. However, the nature of the assumed endogenous relationship in these studies is different from the one implied by the theoretical model. Note: * number of cases out of 100 for which the true value of the estimated elasticity of substitution coefficient (σ = 5) belongs to the estimated 95% confidence interval.

( ) k j k j k j E P FM 1 - = σ σ - = 1 k i k i p n k i FE k j P 5 Some studies, including
Despite the appeal of the fixed effects approach, it has two main shortcomings. First, it does not permit to estimate the impact of any country specific variables, such as domestic distribution costs, product quality or environmental norms. As shown by AvW (2004), this type of costs is relatively large, and accounts for an increasing share of total trade costs (as tariffs, transportation and communication costs continue to drop). Secondly, the fixed-effects estimators do not permit to distinguish the trade theory lying behind the estimated trade equation while this is crucial [START_REF] Head | Increasing returns versus national product differentiation as an explanation for the pattern of U.S.-Canada trade[END_REF]. Thus, while the fixed-effects technique permits to correctly estimate the elasticity coefficient, it has no power in telling what exactly country fixed effects stand for.

Conclusion

Due to its empirical success, the gravity approach is widely used to explain trade patterns between countries. Two main theoretical frameworks attributed to Armington and to Helpman-Krugman legitimate this approach at the macro-economic level. In this article we question the relevance of this approach to product trade on two grounds. Therefore, collecting good sector-level trade and expenditure data is crucial for the quality of estimated parameters.

  equation (9'') as a demand-weighted average price of products exported by country i in cif terms. Stated differently, k i Π ~ is the hat this price index is the result of two effects. The first part of equation (9'), ( ) average price paid by consumers from all countries for goods produced in country . Equation (9') shows t i ordinary supply size effect: the larger the amount of goods produced by e lower the price at which they ar arket. The seco (9'), , denotes a : expe cts (high ) are sold m inly to d to countries with higher entry barriers.Therefore, the larger the producer price, the lower the average trade costs for these products st frequently instrumented by they can be shipped at low trade costs, while cheaper products (low k i p )can be shipped as well to more distant countries an nsive produ a and the lower the average price paid by consumers.

  solve the system (12) and obtain 900 trade flows and 30 roducer prices. In the second step, we add a normally distributed zero-mean error term k ij ε to the simulated trade data, and estimate the equation system (12) using non linear least squares. simplify the econometric estimation, we focus on the estimation of p e σ and fix

  trade-costs-free expenditures are used, no estimated coefficient is statistically different from its true value (used for data simulation). By slightly increasing the coefficient on expenditures (from 1.00 to 1.05) we actually decrease the gap between trade-costs-free and true expenditures. Actually, to reach this outcome it is sufficient to relax only the assumption relative to the value of the coefficient on variable k j E (the estimated coefficient on k i Y is equal to one). We obtain very biased estimates of both expenditure and production coefficients when sector productions are used to measure (proxy) sector level expenditures. The relationship between sector-level production and expenditure values is much less systematic in this case. Hence, relaxing the assumption of unitary coefficients does not produce the same results. The deviation of coefficients on and k j E from unity in this case depends also on the correlation between sector-level expenditure and production values. Note as well that, during the estimation k i Y s ranges from 0.38 to 0.40. If we set one producer price ( ) equal to its true sim lated value, the coefficient of correlation rises to nearly 0

  as in the AvW model (equation (

  ) and obtain 900 trade flows and 30 importer-specific price indices for each data set. Secondly, we add a normally distributed error term k ij ε to the simulated trade flows, replace negative values by zero, and finally estimate equation system (23) with different measures of expenditures: (i) true (generated values) expenditures, (ii) true values less trade costs, and (iii) production values.

  AvW and HK data sets the fixed-effects technique yields unbiased estimates of σ . Still, the estimated coefficients are both closer to the true value ( ) when non linear least squares are used. This reveals again the importance of respecting the non linear structure of the trade model.

  First, we show that the Armington version of gravity builds heavily on the equality between the value of global expenditure and the value of global production, an assumption seldom verified at sector level because at least some trade costs paid by sector consumers are incurred by producers from other sectors. We propose a modified version of the Armington gravity that solves this inconvenience with real data. Secondly, we estimate the two gravity approaches (the modified Armington model and the HK model) with non linear techniques using simulated data and different measures of importer's expenditure. The mis-measurement of sector expenditures significantly affects the value of the estimated behavioural parameters in both approaches.

Table 1 : Econometric results from the modified Armington (AvW) gravity version for sector-level trade with different measures of expenditure and theoretical constraints

 1

	Elasticity of substitution σ	Coefficient on E j	Coefficient on Y i

Table 2 : Econometric results from the Helpman-Krugman gravity version for sector-level trade with different measures of expenditures and theoretical constraints

 2

	Elasticity of substitution σ	Coefficient on E j	Coefficient on Y i

Table 3 : Econometric results from the Fixed-Effects gravity

 3

	Elasticity of substitution σ

Table A3 : Correlation coefficients of different measures of sector-level expenditures, the HK gravity

 A3

		Coefficients of correlation
	Measure of expenditure	True (generated) expenditure	Trade-cost-free expenditure	Production
	True (generated) expenditure	1.00
	Trade-cost-free expenditure	0.99	1.00
	Production	0.04	0.06	1.00

Table A4 : Correlation coefficients of producer prices, the HK gravity

 A4 Lower correlation coefficients are obtained when the constraints of unitary Y i and E j coefficients are relaxed.

		Coefficient of correlation
	Producer prices	with true (generated)
		prices
	True (generated) prices	1.00
	Estimated prices with true expenditures and p 1 = 1	0.29
	Estimated prices with trade-cost-free expenditures and p 1 = 1	0.20
	Estimated prices with importer productions and p 1 = 1	0.18
	Estimated prices with true expenditures and true p 1	0.80
	Estimated prices with trade-cost-free expenditures and true p 1	0.46
	Estimated prices with importer productions and true p 1	0.49
	Note:

Again, this second issue does not appear when the gravity model is applied at the aggregate level because these trade costs are captured in countries' GDPs/incomes (under the assumption of balanced trade).

Financial support received by the "New Issues in Agricultural, Food and Bio-energy Trade (AGFOODTRADE)" (Small and Medium-scale Focused Research Project, Grant Agreement no. 212036) research project, funded by the European Commission, is gratefully acknowledged. The views expressed in this paper are the sole responsibility of the authors and do not necessarily