International Differences in the Agricultural Price Level: Factor Endowments, Transportation Costs, and the Political Economy of Agricultural Protection

This paper presents a model of the agricultural producer price level as a function of a country's structure of agricultural trade and its protection of agriculture. In turn, the structure of a country's agricultural trade is a function of its resource endowment and its level of agricultural protection. The level of agricultural protection is a function of the political strength of farmers and of the structure of its agricultural trade. These relationships are estimated in a simultaneous equation framework.