Using the elasticities from the AIDS model to evaluate international market competitiveness: the case of three Egyptian wheat markets

The Almost Ideal Demand System (AIDS) model approach is used to assess the competitive position of US wheat relative to Australian wheat in the Egyptian market. Results from expenditure elasticities suggest that US import share will rise with Egyptian household income. Cross price elasticities obtained suggest that US wheat is a stronger substitute for Australian wheat, but the reverse is asymmetrical. The study finds that for USA to maintain and expand its competitive position in the Egyptian market in the long-run, it is necessary to maintain current low prices, while improving wheat quality in the long-run.