Empirically Analyzing the Impacts of U.S. Export Credit Programs on U.S. Agricultural Export Competitiveness

From the above result, it can be seen that ‘d’ does not appear as an argument of
the domestic demand of the importing country for good 2. This shows that the demand of
good 2 is not affected by the presence of secondary benefits from of an export credit.

Figure 1 illustrates the inverse import demands of the importing country for good
1 derived from the CD utility function in the absence and presence of secondary benefits
while holding income of the importing country fixed, and assumed that there is no
domestic production. Note that p₁⁰_f = p(C₁⁰_f ,I_f ) and p₁¹_f = p(C₁¹_f ,I_f ) represent the
inverse import demands of good 1 which are derived by respectively by inverting the
(direct) import demands defined in equation 4 and 7. They express the price of good 1 as
a function of quantity consumed, and income of the importing country. Figure 1 shows
that the inverse import demand curve of the importing country shifts to the right if it
receives the secondary benefit relative to the scenario where the importing country
receives no secondary benefits. This arises because for any demand quantity, the price
differential between the two scenarios receiving and not receiving secondary benefits can
be derived as,
(9) SF=p1¹f=p1⁰f/(1-d)

Note that the result presented in Figure 1 resembles the graphical result of a direct
consumption subsidy presented by Houck (1986) (see Figure 9.2 on p89-90). In his
graphical analysis, he supposes that the importing country directly offers the consumption

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