We measure elasticity of substitution between foreign and domestic commodities by way of two-point calibration, in order that the Armington aggregator can replicate the two temporally distant observations of market shares and prices. Along with the sectoral multifactor CES elasticities which we estimate by way of regression using a set of isaggregated linked input-output observations, we integrate domestic production of the two countries, i.e., Japan and the Republic of Korea with bilateral trade modules and construct a bilateral general equilibrium model. Thereupon we make assessment of a tariff elimination scheme between the two countries.
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