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

(a) The Import Demands of the Importing Country in the Absence of Secondary

Benefits from an Export Credit Program

If good Y is allowed to trade between the two countries, the excess demand of
good Y of the importing country is the difference between its domestic demand (4) and
supply (12) for any price level P which lies below its autarky prices P^a . The import
demand can be derived as:

Q^N =c1-y

αI   P

P 2 B

2αBI - P P
2BP

Note that the introduction of the additional superscript ‘N ’ refers to the absence of
secondary benefits from an export credit program offered by the exporting country.

(b) The Import Demands of the Importing Country in the Presence of Secondary

Benefits from an Export Credit Program

With the assumption that the tradable good Y is homogeneous, in the sense that it
is impossible to distinguish its source, its market in the importing country is satisfied
from domestic and imported quantities. If a secondary benefit from an export credit
program is offered to the consumer in the importing country, his/her budget constraint is
altered from the case of not receiving any secondary benefits (see equation 6). It is a
difficult task to separate the quantities being discounted on the payment from those which
are produced domestically. However, from the perspective of the consumer in the
importing country, his/her consumption of domestic or imported good Y depends on

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