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+--- Thread: Cost_ire in endogenous trade (/showthread.php?tid=75)
Cost_ire in endogenous trade - Pernille.S - 16-02-2015
When trading between two internal regions, I normally get the same value for cost_ire in the trading regions (with different sign).
However, this is not happening in a new model I am developing. See attachment.
Note that the model return strange results and I know there is something wrong with the model. I just do not know what yet….. The commodity is defined identical in all regions, and I have modeled trade identical with previous models that have worked fine.
Any tips on what can help me to solve this issue? What is causing this strange cost_ire? In what cases can cost_ire have different values in two internal regions?
All help is highly appreciated!
Cost_ire in endogenous trade - Antti-L - 16-02-2015
Thanks for your post. However, I could not see any attachment.
As you say, normally COST_IRE should have opposite values in the import and export regions, and the sum of all COST_IRE
over all regions should be zero. I cannot recall having seen differing absolute values myself, and so I would like to see an example in order to try and explain it. 
One possible case is trading regions that have different timeslices, where the timeslice conversion might result in non-matching import/export costs.
Cost_ire in endogenous trade - Pernille.S - 16-02-2015
Thank you for your fast reply. Your answer supports my suspicion that something is wrongly defined in the model. As I see, the time-slices is identical defined in all regions.
The figure is now attached.
Cost_ire in endogenous trade - Antti-L - 16-02-2015
Hmm... very interesting! But gives me little clue.
FWIW: Different discount rates in the import and export regions would, of course, also lead to different Cost_IRE. A discount rate of 7% in Norway and 70% in Sweden could result in something like this...
Cost_ire in endogenous trade - Pernille.S - 20-02-2015
Thank you, you are right
. I had used a different discount rate, by mistake, in the Norwegian regions compared to the Swedish regions. Despite going through the model a thousand times I had ignored this......